UK OUTLINES NEW COST-SAVING GENERICS PLAN

The UK's Department of Health has outlined a new long-term strategy for generic drugs dispensed in England by state-run health provider the National Health Service (NHS). The new system is to replace the Maximum Price Scheme implemented in August 2000, and is expected to save around GBP300mn (US$526.49mn) per year.

The new price control scheme separates manufacturers (under Scheme M) and wholesalers (Scheme W), with pricing plans to be received from producers on a quarterly basis. The manufacturer price will be key to the calculation of prices of drugs in the so-called "Category M" of the UK's Drug Tariff list introduced in April. Category M replaced some parts of Category A, which contains "commonly available" drugs -- mainly those manufactured by major generics firms.

Another important difference is that drugs in Category M are calculated on the basis of the average manufacturer market price after a discount is applied, whereas Category A calculates prices from a "basket" of similar drugs before this discount is applied.

Although the new scheme will be "voluntary," it is reported that companies opting not to comply will be subject to mandatory price limits under law. Meanwhile, the government hopes that its new system will satisfy both officials and suppliers, following the rejection of more radical proposals in April.