Early renegotiation of the current drug pricing system in the UK could leave the pharmaceutical industry short-changed, if the government’s plans to generate substantial savings from the NHS drugs budget go ahead.

The government is reportedly seeking a 10% cut in what the National Health Service is charged for branded medicines, in a drive to cut down the current drugs bill of around £11 billion, according to the Financial Times.

Health Secretary Alan Johnson told the newspaper that he plans to garner “substantial savings in the drugs budget during talks to be completed by June on the PPRS”, as part of a larger move to save 3% a year by the Department of Health, as outlined in the Treasury’s last spending review.

Last August, the DH shocked drugmakers by announcing a renegotiation of the PPRS, “to ensure that the taxpayer gets value for money and patients continue to benefit from innovative products at a reasonable price”.

The move was prompted by an Office of Fair Trading report, which recommended reforming the PPRS to a value-based system to help deliver greater benefit to patients. Furthermore, it claimed that the NHS could save up to £500 million a year by choosing the cheapest alternative on a range of popular medicines.

Hot topic
The future of the PPRS is expected to be one of the hot topics of 2008, and if the government does push for a 10% discount it will no doubt spark heated protest from the industry, particularly as the current scheme, under which the NHS is offered a 7% cut on the price of branded drugs, is due to run until 2010.

According to the FT’s report, the industry is fully behind sticking to the original five-year deal, as it provides “predictability and stability in pricing, encouraging investment in new drugs”. Furthermore, there seems to be growing concern that more emphasis is being placed on slashing drug prices than the potential health and social care their use could offer.

The Association of the British Pharmaceutical Industry and the Department of Health were considering the release of a statement regarding the FT’s report as PharmaTimes UK News was going to press but, in the meantime, a spokesman for the ABPI stressed that any figures being circulated in media reports are, at this time, purely speculative.

He went on to say that, in general terms, the renegotiation of the PPRS is not just about price, but encompasses four key issues: value for money; encouraging and rewarding innovation; assisting the uptake of new medicines; and ensuring stability in the UK environment.