U.K’s Department of Health seeks to cut prices in medicines up to 20%

June 21 2013 | By Márcio Barra

Frederick Curzon, 7th Earl Howe

Portugal isn’t the only EU member state looking on how to reduce state expenditure with medicines in the face of austerity. In the U.K., alongside the upcoming implementation of value-based pricing, linking the price of a drug to its value, in January 2014, the Department of Health announced today it’s plan to slash branded drug prices up to 20%. This is so that the U.K’s government can save 11.5 billion pounds ($18 billion) in the 2015-16 spending year.

The cuts would apply to drugs not covered by an existing agreement between manufacturers and the government known as the Pharmaceutical Price Regulation Scheme, or PPRS. The products outside the PPRS account for about 10% of the branded medicines used in the U.K., according to the Association of the British Pharmaceutical Industry. The government said it will also continue negotiating with the industry over the PPRS, taking into account  NICE’s reviews and recommendations.

“We cannot simply spend more and more on drugs – this would mean spending less and less elsewhere. That’s why we have asked NICE to look at the impact that drugs can have on people’s ability to work or contribute to the economy and society. 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.” said in a statement the Department of Health’s Under Secretary of State Frederick Curzon, who sits in the House of Lords as Earl Howe.

This news weren’t well received by industry, which argues that prices of new drugs in the U.K. are already among the lowest in Europe. The Association of the British Pharmaceutical Industry claims prices of branded drugs are set to fall further by 2015 as a percent of the health budget.

NICE will see its role in assessing the economic benefit of new drugs for the U.K.’s NHS broaden, with the introduction of Value-based pricing.

Sources:

UK Government

Bloomberg

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