REPORT RECOMMENDS THAT UK REFORM DRUG PRICING SCHEME

The UK's Office of Fair Trading (OFT) released a report today recommending that the Pharmaceutical Price Regulation Scheme be reformed to deliver better value from National Health Service (NHS) drug spending and to focus funding on drugs that have the greatest benefits for patients.

The NHS spends roughly 8 billion pounds a year on brand prescription medicines. The OFT's study identifies a number of drugs where prices are significantly out of line with patient benefits. These include treatments for cholesterol, blood pressure and acid reflux. Some drugs currently prescribed in large volumes are up to 10 times more expensive than substitute treatments that deliver very similar benefits to patients.

The study recommends that the current "profit cap and price cut" scheme, where companies are free to set their own prices within very broad profit constraints, 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 estimates that it would free up roughly 500 million pounds that could be spent more effectively.

Over time, value-based pricing would give companies stronger incentives to invest in drugs for medical conditions where there is greatest need, according to the report. Many countries, including Sweden, Australia and Canada, have successfully implemented value-based pricing and reimbursement systems.