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Tough talking ahead as government signals end to UK medicines pricing deal

Published on 02/08/07 at 04:39pm

The government has told the UK pharmaceutical industry it wants to talk about the future of medicines pricing in the country, signalling that the existing PPRS deal could be scrapped.

The Pharmaceutical Price Regulation Scheme has been in existence since the 1950s, and has worked by allowing companies to set their own prices while capping profits made on selling to the NHS.

But now, new health secretary Alan Johnson has declared that the government wants to begin negotiations on pricing  suggesting that the long-serving system will be either scrapped or significantly overhauled.

The decision has been prompted by a report published in March by the Office of Fair Trading, suggesting the PPRS should be replaced by a value-based system where prices reflect the relative benefits of drugs for patients.

Industry body the ABPI had hoped that the government could be persuaded to retain the PPRS, which it says has been one of the factors behind the UK pharma industry being one of the country's few world-beating industries.

Responding to the news, ABPI President Nigel Brooksby tried to maintain a positive outlook on the announcement, and did not acknowledge that the PPRS' days may well be numbered.

"The PPRS has brought many benefits to the NHS and to the UK as a whole, and these can be summed up in the government's own words as providing stability, sustainability and predictability.  It is essential that these remain integral to the PPRS as it evolves," he said.

Industry interest group the Ethical Medicines Industry Group (EMIG) was another to issue a quick response to the news.

The EMIG represents 40 small to medium-sized pharma companies whose product base and interests are often quite different from those of titans such as Pfizer and GSK.

The EMIG had expressed its desire to see the PPRS reformed to help smaller companies compete more effectively - but its leaders have warned of dire consequences if the government decides to squeeze industry profits.

Leslie Galloway, chairman of EMIG, said: "The negotiations could distort the stable pricing offered by the current PPRS and this would be detrimental to the NHS and patients. EMIG supports the NHS in attempting to make savings. However, we believe that making short-term savings on products that are already cost-effective will only backfire in the long term."

Stressing the need for smaller pharma companies to be properly represented at the talks, Galloway added: "A further price-cut across the board would make many lower priced medicines no longer sustainable for smaller companies to produce, forcing the NHS to buy more expensive versions from the larger companies.  

"EMIG believes that this competition is essential for the future development of the industry  at a price the NHS can afford."

Few details have so far emerged about the terms of the negotiations, but the ABPI has taken heart in the fact that the government has acknowledged the industry's contribution to the UK, and that it has also expressed a wish to see a faster uptake of new medicines.

The government may offer a guarantee of faster uptake of new medicines against cheaper prices, but the industry will continue to argue that the NHS already gets a good value-for-money deal from medicines.


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