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Radical overhaul of NHS prescription drug prices recommended

Published on 20/02/07 at 12:41pm


The Office of Fair Trading wants to reform the way prescription medicines are priced to reflect the benefits they bring to patients.

Its long-awaited report into UK drug pricing recommends replacing the current Pharmaceutical Price Regulation Scheme (PPRS) after it found the NHS was paying too much for some treatments.

OFT Chief executive John Fingleton said: "Focusing prices on the needs of patients rather than on the costs of drug companies would be good for both patients and for business.

"It would allow more patients better access to more effective treatments, and it would focus drug company innovation and investment on the areas where patients need it the most, creating more valuable drugs in the future."

The report identified a number of treatments where prices were significantly out of line with patient benefits, including cholesterol, blood pressure and stomach acid drugs.

The NHS spends about £8 billion a year on branded prescription medicines, but some drugs currently prescribed in large volumes are up to 10 times more expensive than substitute treatments that deliver very similar benefits to patients, the report said.

The current PPRS allows companies to set their own prices within very broad profit constraints. The voluntary scheme is negotiated every five years between the Department of Health and the Association of the British Pharmaceutical Industry, with the current scheme running from 2005 to 2010.

The OFT proposes replacing it with a fully reformed PPRS from 2010, with maximum prices for branded drugs set on value-based principles. Similar systems are already used by a number of countries, including Sweden, Australia and Canada.

In the UK cost-effectiveness analysis would be undertaken by NICE, the Scottish Medicines Consortium and the All Wales Medicines Strategy Group with work coordinated by agreement between the UK health departments.

The OFT estimates its proposed scheme would save the NHS around £500 million per year, which could be used to improve patient access to medicines and other treatments they are currently denied.

The OFT launched its unprecedented investigation into the PPRS in September 2005. In the course of its inquiry, it worked with the National Audit Office to analyse the schemes workings, surveyed 1,000 GPs about their prescribing behaviour and discussed the case for reform with key stakeholders in government, industry and the NHS.

The Department of Trade and Industry and the Department of Health now have 120 days to consider and respond to the OFT's findings and recommendations.

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