Review planned for UK drug pricing scheme

The Pharmaceutical Price Regulation Scheme helps maintain a stable and supportive environment for drugs firms investing in the UK. How will a revised version aim to protect their interests?

Earlier this year, a report from the Office of Fair Trading (OFT) recommended that the UK Government’s pricing agreement with drug companies should be reviewed.

Currently the Pharmaceutical Price Regulation Scheme (PPRS) links pharmaceutical prices to production cost and caps profits that can be made by firms.

The OFT suggested that drug prices should instead be linked to their health benefits, rewarding the most effective treatments and increasing efficiency for the NHS.

Listening to industry concerns

The Department of Health has just announced that it will look to re-negotiate the PPRS with industry.

“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,” said a spokesperson from the Department of Health.

However, the UK’s competitiveness minister has emphasised that industry concerns about a revision of the scheme will be central to a renegotiation.

“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,” he said.

Maintaining stability for investors

One of these concerns is that a future pricing scheme could affect the stable framework that attracts pharmaceuticals firms from around the world to the UK.

“It is important that, once introduced, a future pricing scheme provides stability, sustainability and predictability for industry,” commented Stephen Timms.

“OFT identified this as an important area and industry has stated on a number of occasions that the stability of the UK Market makes it an attractive place to invest.

“We want to ensure that the UK remains a stable market over the coming years.”

Increasing uptake of new drugs

Promoting the take-up of new and innovative treatments will also be a priority going forward.

The UK Government already spends more on R&D in health than any other government apart from the USA.

“It is in all of our interests that any pricing system will encourage research and reward innovation which delivers valuable new treatments,” said Timms.