OFT calls for new drug spending plan
by Elaine Frei
The Office of Fair Trading (OFT) has said that the National Health Service (NHS) is paying far too much for name-brand drugs. In the conclusion of a study that has been ongoing since September 2005, the OFT has decided that the Pharmaceutical Price Regulation Scheme (PPRS) needs to be redesigned because in its current state it does not result in the NHS obtaining the best prices on the drugs. The report says that alterations to the system should be made that will get the NHS better value for its money and to focus on drugs that deliver the greatest benefits to patients. The Department of Health currently purchases £7 billion worth of brand-name drugs each year. The OFT estimates that a new plan could cut £500 million per year from that amount.
The PPRS, as it is presently constituted, sets a ceiling on the profits each pharmaceuticals company is allowed to make on its sales of name-brand medicines to the NHS each year. It is voluntary scheme and comes up for negotiations every five years between the Department of Health and the Association of the British Pharmaceutical Industry (ABPI). The Department of Health is not required to act on the OFT report, but is not likely to ignore its findings due to the large amount of public funds involved.
In reaction to the report, the ABPI said that the increase in the amount of money the NHS pays for drugs has to do with an increased use of drugs, not with any problems in pricing. The ABPI warned that limiting price caps could reduce the amount of research and development the drug companies will do and could spur drug companies to move out of the UK entirely. A lower cap on how much NHS can pay for individual drugs could also limit what the drug companies can charge other governments for their products, since many health services use the NHS price as a guideline and insist that they be charged less for the drugs they purchase.
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