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Review of PPRS continues

OFT still looking at potential alternatives to 60-year old system

The future of the Pharmaceutical Price Regulation Scheme (PPRS) is still in doubt after the Office of Fair Trading (OFT) said it was to continue its investigation into the UK's branded drug pricing system.

The competition watchdog announced last September that it was launching a study into the effectiveness of the PPRS and whether the NHS was getting value for money for the estimated £8bn it spends on branded drugs every year.

The news led some within the industry to suggest that it could lead to a more damaging pricing system being adopted in the future.

Up until now, the study has focused on gathering data about understanding the markets affected by the scheme. The OFT said in the next phase, the focus will shift towards assessing the effects of the scheme and comparing it to other potential alternatives.

OFT chief executive, John Fingleton, did not rule out a reference to the Competition Commission in the future, ìif current access to information and good levels of cooperation are not maintainedî.

ìOur objective is to ensure that PPRS supports vibrant competition that delivers value for money and medical benefits to patients both now and in the future through stimulating innovation,î he added.

Association of the British Pharmaceutical Industry director general, Richard Barker, said that although the industry body questioned the rationale and timing for the study, it was not surprised that the OFT wanted to examine aspects of the PPRS in greater detail.

ìIn our future discussions with the OFT, we shall emphasise the case for stability in the UK market environment, while acknowledging that the scheme is not perfect,î he added. ìWe look forward to co-operating with the OFT in its search for improvements that might meet the government's goals for the scheme to an even greater extent.

The latest PPRS - the method by which the Department of Health (DoH) seeks to control the price of branded drugs sold to the NHS - was negotiated between the government and the UK pharma industry (via the ABPI) in 2004 and is due to run until 2010.

Despite its name as a ìprice regulationî scheme, the PPRS effectively controls the profits pharma companies enjoy more than individual prices of products. While some firms (mainly those US-owned) have at times called for a more free market approach to drug pricing, the industry has tolerated the PPRS, due to the degree of stability it offers.

Related article:
http://www.pmlive.com/archive.cfm?&ArticleID=4107&back=-1

 

30th September 2008

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