UK pricing reform derailed

pharmafile | July 15, 2011 | News story | Sales and Marketing NICE, PPRS, value-based pricing 

Plans to revolutionise the pricing of medicines in the UK look to be another casualty in the Department of Health’s troubled reform programme.

Health secretary Andrew Lansley had championed Value-Based Pricing (VBP) as the solution to many of the shortcomings in the UK’s current drug pricing system, and had wanted to do away with the existing PPRS system entirely.

But as with the radical plans for reforming the NHS, the plans have come up against numerous obstacles, and look set to be significantly watered down. Value-Based Pricing is still set to be introduced in 2014, but the changes now look set to be more evolutionary than revolutionary.

Neither the Department of Health nor the ABPI were willing to talk directly about how they see the new system working – but it is clear plans for radical reform have lost momentum.

Pharmafocus understands that the government has accepted the ABPI’s assertion that it would be impractical for VBP to be applied retrospectively to drugs already on the market.

Most significantly, the government has quietly announced a U-turn on NICE.

The cost- and clinical-effectiveness body will now retain its central power of directing the NHS on the use of medicines. This reverses the policy announced last October to take away NICE’s authority – which was to be a prelude to creating an entirely new drug appraisal system.

Now that NICE will retain its powers, the government will have to go back to the drawing board on how exactly VBP might work.

What is certain is that the timetable for progressing the reforms has slipped.

The DH is still sifting through the responses to its consultation that ended on the March. As the Department is now preoccupied with salvaging the Health and Social Care Bill, observers expect the government won’t even release its formal response to the consultation until winter. This comes after pressure from the UK pharma industry, which has argued that VBP be given an incremental role in drug pricing.

There are other practical problems for the Department of Health in turning its complex and untried VBP system into reality.

The Department has been a victim of efficiency savings in Whitehall, and its staff numbers have been dramatically cut in the past year – which means getting the system up and running and maintaining it would be a considerable drain on resources.

Talking to Pharmafocus Paul Catchpole, director of value and access at the ABPI, went as far to say things would be ‘business as usual’ for pharma after 2014, suggesting the pricing landscape would not be very different from today.

If the government does eventually decide to limit the use of VBP, the pharma industry may well claim a lobbying victory. While public opposition to the plans have been generally muted, it is clear that behind closed doors senior industry figures have argued hard against the plan, which many believe offers few advantages over the PPRS.

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