Government and pharma strike new drug price deal
pharmafile | June 18, 2008 | News story | Sales and Marketing |Â Â Â
The government and the pharmaceutical industry have reached an 'outline' agreement for the hotly anticipated revised Pharmaceutical Price Regulation Scheme.
The ABPI says the outline arrangements reflect a reasonable balance and will deliver stability and predictability for the industry along with value for money for the taxpayer.
Stability was a particularly critical factor for the ABPI, which had expressed strong concerns about the impact that the government's premature withdrawal from the 2005 agreement would have on UK industry.
Encouraging research and rewarding innovation for the benefit of both patients and the industry will be key factors in the final agreement. It is hoped the new pledges will ensure access to innovative treatments that are both clinically and cost effective.
The ABPI has said it is working with the government on the issue of drugs not approved by NICE in particular. Although NICE will have no involvement in price setting or negotiation – which, critically, will remain at the discretion of the pharmaceutical company upon launch of a NCE – the ABPI recognised the need for a joint dialogue with the NICE and regulatory bodies.
Commenting on the negotiations, ABPI director general Richard Barker said: "It's not over yet, and it's not a victory for one party or the other – but it's a victory for the patients".
The main difference between the new pricing system and the old 2005 agreement is that measures will be taken to reduce the price of drugs which have lost exclusivity, where a generic equivalent exists. This would discourage GP 'brand loyalty' and promote competition in the market.
Several key branded drugs currently regularly prescribed by NHS doctors are due to lose exclusivity over the next few years.
Further agreements reached in the initial package include:
* A saving of 5% in the cost of drugs sold to the NHS, and a further reduction of 2% if growth in the drugs bill exceeds an agreed threshold. This would represent a contribution by industry if the rate of growth in medicines exceeds that of healthcare.
* A base cut price for all branded medicines of 2%
* A further variable price cut to deliver 5% overall
The new five-year agreement, set for introduction in January 2009, will continue to be non-contractual and voluntary, and there will be no mid-term review, which the ABPI said would ensure stability and predictability in pharmaceutical pricing the five-year period.
The existing PPRS agreement will continue in place until the end of the year, with a freeze on current prices until it commences.
A consultation on a possible future statutory agreement has also been launched by the government. Such an agreement would control the prices of branded medicines, and be imposed upon companies that did not sign up to any new agreement emerging from ongoing PPRS negotiations.
The ABPI has been fighting for stability and fair prices for UK medicines since the OFT published a report in March 2007 advising that the PPRS should be replaced by a value-based system where drug prices were reflective of their relative benefits for patients.
The government appeared to seize an opportunity after the announcement, and in February wrote to participating members of the PPRS to say the current agreement would be coming to an end.
The ABPI criticised the move, saying it reflected badly on UK pharma pricing, and that industry would disinvest in the country if the new deal were not favourable to pharmaceutical companies, and move to competitors, particularly emerging Asian markets.
The value-based system recommended by the OFT has not been used as a model for the new system, which has retained many of the previous scheme's core features. The ABPI said that long-term investment in the industry should not be affected now that the scheme has a further five years' stability guaranteed. It said that the new system would give a real boost to the UK environment, rather than the disastrous effects that scrapping the scheme completely might have had.
Commenting on the new negotiations, ABPI president Chris Brinsmead said: "The outline agreement provides an excellent platform from which we can work to strengthen our relations with the government and the NHS, and further improve the access to innovative medicines for patients."
He added that a "raft of measures" would help eliminate delays in providing new medicines.
Further negotiations will take place over the next few weeks before the new scheme will be finalised and implemented.
