Investigation into UK medicines prices to continue
pharmafile | March 24, 2006 | News story | |Â Â Â
Competition watchdog the Office of Fair Trading is to continue its investigation into how prescription medicines are priced in the UK, raising pharma industry fears that the existing system could be scrapped for one less favourable to the sector.
The current Pharmaceutical Price Regulation Scheme (PPRS) has been under inquiry since September 2005, and the watchdog has now announced its probe will enter a new phase.
So far the OFT's work has involved gathering data on the markets affected by the scheme, but will now focus on assessing the effects of the scheme and comparing it to potential alternatives. The investigators say this will involve "analysing market outcomes in the UK and drawing lessons from international experience."
The PPRS allows companies to set their own prices but limits the profits they can make, and has enjoyed the backing of the government and the industry since 1957, when an early version of the scheme was established.
The final OFT report is due to be published in the first quarter of 2007, and could still have numerous possible outcomes ranging from no change, to partial change to a complete re-think for the system.
John Fingleton, OFT chief executive said: "Our objective is to ensure that PPRS supports vibrant competition that delivers value for money and medical benefits to patients both now and in the future through stimulating innovation. We're very happy with the positive co-operation we've received from both government and industry so far, and will look to maintain that as we move forward with the study.
Dr. Richard Barker, director general of the UK industry association the ABPI responded to the news saying: "Although we continue to question the rationale and timing for the study, we do not find it particularly surprising that the OFT should want to examine aspects of the PPRS in greater depth, given its complexity."
He said the ABPI's future discussions with the watchdog would emphasise what it calls the case for stability in the UK market environment, but would also acknowledge that 'the scheme isn't perfect' – suggesting the industry is open to a compromise deal.
Barker added: "We look forward to co-operating with the OFT in its search for improvements that might meet the governments goals for the scheme to an even greater extent."
Despite this willingness to negotiate, the ABPI says the PPRS has delivered on government and industry objectives over a long period, and warned that a radical overhaul could 'fundamentally undermine' the stability of the UK which has made it an attractive location for pharma.
"We welcome the OFT's acknowledgement of the need to offer appropriate incentives for pharmaceutical companies to continue researching and developing innovative medicines, and would also welcome any initiatives to make the UK an even more vibrant location for the global pharmaceutical industry," said Dr. Barker.
Not all pharmaceutical companies oppose a serious overhaul of the PPRS. The Ethical Medicines Industry Group (EMIG), which represents 45 of the UK's small to medium sized pharmaceutical companies says it is pleased the investigation is continuing.
It says the current PPRS has a number of detrimental effects on smaller companies, which create barriers to competition, and wants to see these addressed.
