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20/02/2007
Reform recommended for UK drug pricing scheme
The NHS needs to reform its system for purchasing medicines in order to deliver better value for money, the Office of Fair Trading has said.
The OFT also said that the Pharmaceutical Price Regulation Scheme should be reformed in order to focus business investment on drugs that have the greatest benefits for patients.
The NHS spends around £8 billion a year on branded prescription medicines. The OFT's study identified a number of drugs which it said were priced "significantly out of line with patient benefits". These included treatments for cholesterol, blood pressure and stomach acid.
The OFT said that some drugs currently prescribed in large volumes are up to ten times more expensive than substitute treatments that deliver very similar benefits to patients.
The study recommended that the current 'profit cap and price cut' scheme - where companies are free to set their own prices within very broad profit constraints - should be replaced with a patient-focused value-based pricing scheme, in which the prices the NHS pays for medicines reflects the therapeutic benefits they bring to patients.
The OFT said that this would enable the NHS to obtain greater value for money from its existing drug spend, releasing in the region of £500 million of expenditure that could be used more effectively, giving patients better access to medicines and other treatments which they may currently be denied.
John Fingleton, OFT Chief Executive, said: "Focusing prices on the needs of patients rather than on the costs of drug companies would be good for both patients and for business. It would allow more patients better access to more effective treatments, and it would focus drug company innovation and investment on the areas where patients need it the most, creating more valuable drugs in the future."
The Department of Trade and Industry and the Department of Health now have 120 days to consider and respond to the OFT's findings and recommendations.
(KMcA/EF)
The OFT also said that the Pharmaceutical Price Regulation Scheme should be reformed in order to focus business investment on drugs that have the greatest benefits for patients.
The NHS spends around £8 billion a year on branded prescription medicines. The OFT's study identified a number of drugs which it said were priced "significantly out of line with patient benefits". These included treatments for cholesterol, blood pressure and stomach acid.
The OFT said that some drugs currently prescribed in large volumes are up to ten times more expensive than substitute treatments that deliver very similar benefits to patients.
The study recommended that the current 'profit cap and price cut' scheme - where companies are free to set their own prices within very broad profit constraints - should be replaced with a patient-focused value-based pricing scheme, in which the prices the NHS pays for medicines reflects the therapeutic benefits they bring to patients.
The OFT said that this would enable the NHS to obtain greater value for money from its existing drug spend, releasing in the region of £500 million of expenditure that could be used more effectively, giving patients better access to medicines and other treatments which they may currently be denied.
John Fingleton, OFT Chief Executive, said: "Focusing prices on the needs of patients rather than on the costs of drug companies would be good for both patients and for business. It would allow more patients better access to more effective treatments, and it would focus drug company innovation and investment on the areas where patients need it the most, creating more valuable drugs in the future."
The Department of Trade and Industry and the Department of Health now have 120 days to consider and respond to the OFT's findings and recommendations.
(KMcA/EF)
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