Flexible pricing PPRS hailed as a ‘landmark’ deal
pharmafile | November 21, 2008 | News story | Sales and Marketing |Â Â ABPI, parÂ
The future of UK medicines could be revolutionised by a new deal that contains two pioneering measures on flexible prices and the uptake of new medicines.
The agreement includes incentives to doctors to prescribe novel medicines alongside a new flexibility in pricing, which the industry says will allow it to deliver value for money to the NHS but also protect innovation.
The deal will retain the PPRS name – the pricing deal which has existed in the UK since the 1950s – but in many ways the agreement is significantly different.
David Fisher, the Commercial Director at the Association of the British Pharmaceutical Industry said, "Our goal was to, as far as possible, create a pro-innovation and a pro-competition PPRS."
He says the new deal combines the existing PPRS system in which industry profits are capped, with new elements of innovation and flexibility.
He added, "It's the PPRS but not as we know it."
The new agreement is effective from February 2009, when the cost of branded drugs will be cut by 3.9%, with a further 1.9% cut in 2010.
The two sides had agreed the broad principles of a similar deal in July, but this ran into trouble in recent months, with difficulties over calculating NHS savings said to play a role.
This latest and reportedly final agreement looks to be more positive for the industry because of the price flexibility and also as price cuts on branded medicines are smaller than those agreed in July. To counterbalance this, pharmacists will be able to use generic substitution from 2010. This allows them to dispense cheaper generic equivalents when GPs prescribe branded medicines, and thereby recouping saving for the NHS.
The outline deal agreed in the summer would have guaranteed the NHS £300-400 million in savings, and although no figure has been attached to the new deal, a similar sum is expected.
ABPI Director General Richard Barker has hailed the agreement as a major breakthrough.
"This landmark deal marks a turning point for patients, the NHS and the pharmaceutical industry. For the first time, the PPRS is much more than a simple economic agreement that looks at price alone.
"It is an all-encompassing package that encourages the discovery of new, more effective medicines, while at the same time allowing NHS patients to access these treatments more quickly.
"With the Department of Health, we have developed a solution that addresses the immediate needs of patients and their families, and the NHS."
Flexible pricing
Companies will retain their ability to set their own prices for products at launch, but will now also be able to raise prices once clinical effectiveness or value is proven.
The Department of Health said: "The flexible pricing scheme agreed will ensure that medicines fairly reflect their value to patients, branded drugs will see their price cut, and industry innovations will be encouraged and rewarded."
Innovation
The PPRS also contains a new package of measures to promote innovation, which is three-pronged.
Doctors will be given incentives to prescribe new medicines in order to drive innovation through the system. Pilot schemes are planned that will recognise and reward high quality prescribing as well as low cost prescribing.
Secondly, a new type of horizon scanning, will be introduced to give prescribers and PCTs better visibility of new drugs coming through pipeline.
The ABPI's David Fisher said better horizon scanning would help the NHS plan and budget for medicines use, and that a new national database for NHS access will be built to increase awareness of new medicines.
Finally, uptake of new medicines in the UK will be monitored at local, regional and national level, and also benchmarked against international level.
The non-contractual, voluntary scheme aims to provide stability and predictability in pharmaceutical pricing for the next five years.
Some details of the scheme are still being worked on, and won't be seen until 5 December, but so far it seems both government and industry are happy with the new package.
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