Deal reached on NHS drug prices

from BBC news

Drug costs will fall under the plan

The government and the drugs industry have struck a deal which could save the NHS in the UK up to £550m per year. A flexible pricing scheme will mean new drugs can be initially introduced at a lower price, which could be increased if the medicine proves effective.
There are set to be more schemes where the NHS and drug companies share the cost of innovative treatments. An Office of Fair Trading report last year said the NHS spent up to £500m annually on overpriced medicines. The deal is expected to save the NHS around £350m in 2009/10, and around £550m every year after that.In 2006/07, £10.6 billion - 12.7% of the total NHS budget - was spent on drugs.

A more flexible approach to pricing is in everyone's interest.

Health Secretary Alan Johnson

Under the current system, a drug company sets a price for a new medicine when it is launched, and there is little opportunity to change that - so firms set the price at what they think a drug will ultimately be worth, even if there is little evidence for that at the outset. The flexible pricing scheme aims to change that, and means a medicine's cost could go up - or down.

The cost of branded drugs will also be cut.

'In everyone's interest'

Overall, the cost of drugs is predicted to fall from 3.9% from February 2009 with a further cut of 1.9% from January 2010.

The government and ABPI will also look at introducing generic substitution from 2010 - which would mean a pharmacist could give out the cheaper non-branded version of a drug even if the GP had named the branded version on the prescription.

At the moment, that is not allowed.

Health Secretary Alan Johnson said of the new arrangements: "A more flexible approach to pricing is in everyone's interest.

"It gets clinically and cost effective drugs to more patients - providing cheaper options where clinically appropriate - delivers value for money for the NHS and the tax payer, and creates a better market for the pharmaceutical industry while supporting research and innovation."

Dr Richard Barker, director general of the ABPI said it was the first time the pricing agreement between the NHS and the drugs industry had not been purely a financial deal.

"This landmark deal marks a turning point for patients, the NHS and the pharmaceutical industry.

"It is an all-encompassing package that encourages the discovery of new, more effective medicines, while at the same time allowing NHS patients to access these treatments more quickly."

Risk-sharing

Nigel Edwards, director of policy at the NHS Confederation which represents NHS managers, said throughout the debate over top-up payments for cancer drugs, they had said one part of the solution had to be a new pricing model.

"It is good news that this is now starting to happen although we would caution that there needs to be care taken that this does not land doctors and nurses with a heavier workload of form filling and bureaucracy."

But shadow health minister Mark Simmonds said the government had damaged the UK's reputation as a base for the pharmaceutical industry and failed to address the issue of drugs being available to patients in Europe that are not available here.

And Liberal Democrat health spokesman, Norman Lamb said: "This new development is welcome but not enough on its own to deliver real change."