£500 million!

Drugmakers in the UK have been stopped in their tracks following the news that the country’s Department of Health is looking to re-open negotiations about the current Pharmaceutical Price Regulation Scheme (PPRS).



The department noted that the health secretary, Alan Johnson, holds talks with representatives of the pharmaceutical industry on a regular basis but at their most recent meeting, he said that renegotiation of the PPRS was needed. Drugmakers signed a five-year deal in 2004 offering price cuts in return for increased allowances to encourage R&D of innovative products.



The Health Ministry said that “whilst we recognise the benefits that PPRS agreements have brought to the UK over the past 50 years, ministers believe it important to update the system so it is fit for purpose in the modern world and contributes to achieving greater efficiency in NHS expenditure”.



It notes that since the last agreement was reached, the Office of Fair Trading has published its controversial report on the PPRS, which concluded that the scheme should be reformed and that “the pricing system should have a more value-based approach in order to deliver greater benefit to patients”.



The OFT report said the NHS could save up to £500 million a year by choosing the cheapest alternative on a range of widely-used medicines.



Competitiveness Minister Stephen Timms said: "We agree with the OFT that it is time to develop a pricing system which is fit for purpose for the 21st century [as] we must ensure that any future pricing scheme delivers value, rewards innovation and ensures a fair deal”. He added that “we are undertaking a continuing programme of detailed analysis of the OFT report's proposals, and will discuss this analysis with the industry, taking into account their strong concerns about a number of the proposals. This is a highly complex area and there are a number of different models for taking work forward”.



Taking a placatory line, the Health Ministry said that “any new agreement will recognise the contribution of the pharmaceutical industry to the UK economy through the provision of healthcare and the development of medical advances. It is in all our interests to encourage research and reward innovation”, it adds, “but above all we want to ensure that the taxpayer gets value for money and patients continue to benefit from innovative products at a reasonable price."