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DoH re-opens PPRS negotiations

The UK DoH will re-open negotiations about the current Pharmaceutical Price Regulation Scheme, following a recent meeting between the Secretary of State and the pharmaceutical industry

The Department of Health (DoH) has announced it is to re-open negotiations about the current Pharmaceutical Price Regulation Scheme (PPRS), following a recent meeting between the Secretary of State and the pharmaceutical industry.

"While we recognise the benefits that PPRS agreements have brought to the UK over the past 50 years, ministers believe it important to update the system so it is fit for purpose in the modern world and contributes to achieving greater efficiency in NHS expenditure," a DoH spokesperson said.

Since the PPRS was last negotiated in 2004, the Office of Fair Trading (OFT) published its report on the scheme, and concluded that the scheme should be reformed.

The Secretary of State has therefore announced that it is timely to enter into a dialogue with the industry to renegotiate the PPRS. The Government has also published today its interim response to the OFT market study on PPRS.

Stephen Timms, Competitiveness Minister, says drugs pricing arrangements between the NHS and pharma companies should be updated.

"We agree with the OFT that it is time to develop a pricing system which is fit for purpose for the twenty-first century," said Timms.

"The OFT report contained a number of detailed proposals as to how a future pricing regime would work. We are undertaking a continuing programme of detailed analysis of the OFT report's proposals, and will discuss this analysis with the industry, taking into account their strong concerns about a number of the proposals. This is a highly complex area and there are a number of different models for taking work forward.

"We will take this work forward over the coming months and will discuss proposals with industry. We will then aim to make further proposals as part of the renegotiation of the PPRS," concluded Timms.

ABPI comments
The Association of the British Pharmaceutical Industry (ABPI) says it recognises the Government's need to gain best value for money from all aspects of NHS services, including medicines. However, it maintains that ìthe NHS already benefits from one of the most cost-effective medicines policies in  Europe,  with  high  levels  of  generics prescribed, prices of branded medicines  in  line  with other major European countries, and schemes being introduced within the NHS to maximise the use of generics.î

The ABPI says its welcomes the assurance from the Government that any new agreement will recognise the contribution of the pharmaceutical industry to the UK economy, and believes that a stable, voluntary agreement is crucial to retain the industry's major R&D investments.

"The PPRS has brought many benefits to the NHS and to the UK as a whole, and these can be summed up in the Government's own words as providing stability, sustainability and predictability. It is essential that these remain integral to the PPRS as it evolves," said Nigel Brooksby, president of the ABPI.

GSK says there is no simple solution
GlaxoSmithKline (GSK), the UK's largest pharma company, agrees with the OFT that there is scope for improvement in the current system.

"However, as was noted by the OFT, there is no simple solution to management of healthcare expenditure, and current challenges are about much more than price," GSK said in the statement.

Commenting on the announcement, Andrew Witty, president of European pharmaceuticals at GSK said: "In addressing the challenges of healthcare costs today, we must not lose sight of the healthcare needs of tomorrow. We want an environment that genuinely rewards value and encourages the development of new medicines and vaccines. This will require thoughtful consideration across the system as a whole. If discussions focus only on cost-saving and price, we will not serve the long-term needs of patients, industry and, importantly, UK competitiveness."

The PPRS is usually negotiated every five years, and the current agreement was published in 2005.

2nd August 2007

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