Health economists at the University of York have backed a system of value-based pricing (VBP) but stress a robust framework is needed to ensure it delivers the expected benefits for the National Health Service.
First proposed by the Office of Fair Trading back in 2007, the concept of VBP - under which the price of medicines reflect their clinical and therapeutic value to patients and the NHS - has become a central vein of the coalition government's plans for reform.
A new system of medicines pricing is to be introduced in 2014, when the current Pharmaceutical Price Regulation Scheme comes to an end, but as yet there has been little detail on how the new system will work.
According to researchers from the University of York's Centre for Health Economics, this fundamental switch in pharmaceutical regulation "offers an opportunity to align the incentives of manufacturers, the NHS and individual prescribers". But in order to realise these gains, there must be "careful specification of the scheme, with emphasis on a clear definition of value".
They suggest that, rather than cutting UK list prices for medicines, effective price negotiation could be achieved via value-based rebates through a PPRS-type arrangement - under which drug manufacturers retain the freedom to set prices and prescribers are reimbursed at these prices as long as a national rebate agreement is established.
“Recovering VBPs through national rebate agreements would allow manufacturers to agree a rebate for the NHS without it having an impact on prices in other countries,” noted one of the report's authors Professor Karl Claxton.
In addition, the report stresses that, if a system of VBP is to work effectively, then any such agreement "should be combined with national or, possibly, local sales volume agreements between the NHS and manufacturers to limit excess and cost-ineffective prescribing".
NICE remains central
Furthermore, Claxton added that value assessments require "a transparent, accountable and evidence-based appraisal of the costs and health benefits offered by a drug, so the National Institute for Health and Clinical Excellence appraisal process remains central to VBP".
On a different note, the researchers were critical of the idea of paying ‘innovation premiums’ for particular products, and suggest that uncertainty in the costs and health benefits of a medicine and irrecoverable costs to the NHS when buying a technology "also needs to be reflected in initial VBP at launch and in subsequent reappraisal and renegotiation".
A consultation period on the government's proposals for VBP is due to end next month, but already there seems to be quite a divide.
The School of Pharmacy has warned that the incoming VBP scheme could face problems. “VBP cannot, for instance, in some way ‘magic away’ the fact of health care funders having to make difficult choices,” it said in a briefing document, reports Chemist + Druggist, and noted that the scheme might make it difficult to determine what should be invested in pharmaceutical research.
The Association of the British Pharmaceutical Industry's Richard Barker has previously stressed the priority in any new system must be to ensure better access to novel medicines, as “value is meaningless without consistent access".
But the industry also agrees that the government and the NHS should seek value for money from medicines. "Our industry must demonstrate the full value of its medicines, it is for government to put in place processes which assess that full value, and then secure access to that value for NHS patients,” Barker said.