UK begins review of branded drug pricing scheme, with proposed cuts up to 20 percent

The UK Department of Health announced Thursday a consultation on a proposed pricing scheme for branded drugs not covered by the voluntary Pharmaceutical Price Regulation Scheme (PPRS), suggesting price cuts of between 10 percent and 20 percent. Health minister Lord Howe said "we cannot simply spend more and more on drugs – this would mean spending less and less elsewhere."

Stephen Whitehead, chief executive of the Association of the British Pharmaceutical Industry, suggested that the new pricing scheme "applies to 10 percent of the branded medicines used in the UK." He added that the system "applies to any company which chooses not to join the negotiated voluntary pricing agreement."

The government also confirmed that as previously indicated, it will task the National Institute for Health and Care Excellence with assessing new medicines as part of a value-based pricing scheme, which will be introduced in January 2014. The Department of Health said the agency will work with the pharmaceutical industry, patient groups and the NHS to determine how to value new drugs.

The Department of Health added that it will continue negotiations with drugmakers on the voluntary PPRS, including how value assessments performed by NICE will influence the price the NHS pays. "A drug that brings a lot of extra benefits may justify the NHS paying more, but equally the NHS might pay less for a drug that does not deliver wider benefits," Howe remarked.

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