Government delays PPRS to maximise savings
pharmafile | November 12, 2008 | News story | Sales and Marketing |Â Â ABPI, parÂ
The PPRS deal agreed in principle this summer has been now thrown into confusion by government, with its launch at least three months delayed.
The new agreement was meant to begin in January 2009, but the Department of Health has stalled progress because of two elements of the deal that which could cost it – or save it – millions of pounds.
One hold-up relates to a new system that guarantees immediate cost savings for the NHS when drugs go off patent in the UK. This is achieved by linking the price of off-patent brands and generic rivals, but a row has blown up over its implementation, with branded generics company Norgine quitting ABPI membership in protest. The government has now launched a consultation on the system, which will take several weeks to complete.
The second problem relates to an agreement for medicines prices to undergo a second price cut (of 2%) if spending of medicines reaches a certain level. Concerns in the Department that poor data tracking might mean it wouldn't achieve this cut mean it is now ensuring a reliable system is in place.
The delays have soured relations with industry, whose members say ministers should have admitted this lack of information months ago and not at the 'eleventh hour.' Despite this, the ABPI has maintained a diplomatic silence over the postponement, conscious of preventing negotiations from becoming public.
The DH has had a poor track record in recent years in negotiating major deals. Most notably, the department is generally agreed to have paid out too much to GPs in the 2005 GMS contract. And it has just emerged that the DH will raid PCT coffers to pay community pharmacists, who face an income shortfall stemming from problems in their new contract (see story right).
The new PPRS is more complex than previous renegotiations, and ministers and civil servants will be anxious to get it right first time.
The core of the deal remains a 5% reduction in the prices of all branded drugs . Added to this is the provisions for a further one-off reduction of 2% in 2010 or 2011 if the drugs bill should grow faster than 6.7% in either 2008 or 2009.
NHS chief executive David Nicholson has now (belatedly) asked Trusts for information that would help determine if the additional cut should be triggered. Writing to Trust chiefs, Nicholson stressed the NHS could see a cost saving of around £160 million on top of the first cut.
Overall, the delays mean a new and complete PPRS is unlikely before March. Industry sources say the hold-ups are down to errors rather than deliberate attempts to delay or derail the agreement.
In support of this view, one source pointed out that the Department would lose out over the delay, as it meant no price cuts could be brought in until the whole deal was finalised.
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