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UK DH commits to value-based pricing

England’s Department of Health has said it will continue to develop a new value-based pricing system for the purchase of drugs to be used in the NHS

England's Department of Health (DH) has said it will continue to develop a new value-based pricing system for the purchase of drugs to be used in the NHS.

The announcement follows the close of a consultation period on the subject obtaining views from relevant stakeholders from a variety of sectors, with the coalition government stating the system will help patients gain better access to innovative medicines.

Currently, the DH uses the pharmaceutical price regulation scheme (PPRS) to judge the cost of medicines. It is expected that value-based pricing will come into effect when PPRS expires at the end of 2013.

As stated in the consultation paper, 'A new value-based approach to the pricing of branded medicines,' the proposed plans include the introduction of weightings to the benefits provided by new medicines. This would imply a range of price thresholds reflecting the maximum amount the government is prepared to pay for medicines.

These maximum prices would be explicitly adjusted to reflect a broader range of relevant factors than is currently in place.

There are four thresholds outlined in the consultation paper regarding the structure of value-based pricing:
• a basic cost-effectiveness threshold, reflecting the benefits displaced elsewhere in the NHS when funds are allocated to new medicines; 
• a higher threshold for medicines that tackle diseases where there is greater "burden of illness": the more the medicine is focused on diseases with unmet need or which are particularly severe, the higher the threshold; 
• a higher threshold for medicines that can demonstrate greater therapeutic innovation and improvements compared with other products;
• a higher threshold for medicines that can demonstrate wider societal benefits.

"It is vital that doctors are able to prescribe medicines that they think will benefit their patients," said Health Secretary, Andrew Lansley. "They must be able to focus on what matters most – achieving the best health outcomes for their patient, not debating the price of a drug. Value-based pricing will ensure this happens."

In its consultation response, the Association of the British Pharmaceutical Industry (ABPI), which represents UK-based pharmaceutical companies, said it 'supports the government's ambition to improve patient access to effective medicines' although the organisation said it was keen for clarity regarding how value-based pricing would help to stimulate the UK economy.

Stephen Whitehead, ABPI CEO, said: "There is much work to be done on the new pricing and reimbursement system and many questions to be answered. The goal is to achieve a scheme under which patients have the best possible health outcomes."

He continued: "This will be achieved by a system that both ensures access to new and innovative medicines and creates the best environment for the research-based pharmaceutical industry in the UK to develop them."

The DH has the complete consultation response paper to download.

The original 'A new value-based approach to the pricing of branded medicines' paper is also available from the DH.

18th July 2011

From: Healthcare

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