OFT review of UK pharmaceutical price regulation (PPRS)

OFT report (120 pages, PDF) from its 17-month study on the Pharmaceutical Price Regulation System. Annexes (several PDF files) are now available.

The report recommends "that Government reform the PPRS, replacing current profit and price controls with a value-based approach to pricing, which would ensure the price of drugs reflect their clinical and therapeutic value to patients and the broader NHS".

The report considers specific options for changes to the reimbursement of off-patents drugs, including the Government policy on standard branded medicines. It recomments that reimbursement to pharmacies for prescriptions for all off-patent brands should be at the Category M generic price, so long as the drug has a Category M equivalent.

For patented drugs, the value-based pricing rule set out by OFT would involve something like a maximum incremental cost per QALY to be "a matter of debate for the government and the pharmaceutical industry", which would be used to set the prices of new drugs by reference to their clinical advantages over old drugs. The report suggests that rebates paid by companies to the NHS would enable any UK price reductions that could result from this scheme to be sustainable in the face of parallel trade.

For further information or advice please contact Franck Latrémolière.

Filed under Healthcare, OFT, Pharmaceuticals.

Reckon LLP is an economics consultancy with expertise in data analysis, economic regulation and competition law.

About Reckon