The government and the ABPI have set the foundations for talks over the new pricing structure for medicines in the UK, which will come into force in 2014 after the current Pharmaceutical Price Regulation Scheme (PPRS) scheme takes its last breath.

In a joint statement released Friday, the Department of Health and the Association of the British Pharmaceutical Industry confirmed that discussions over the shape of the new framework - which will include a new system of value-based pricing - will kick off next month.

Thus far, it is envisaged that value-based pricing will predominantly apply to medicines approved from 2014, though a small number of existing drugs might also be assessed, such as some of those currently paid for by the Cancer Drugs Fund.

Pricing for all products licensed in the UK or the EU before 31st December 2013 will fall under a scheme "similar but not identical" to the PPRS, according to the statement.

It has now been agreed by the government and the ABPI that the new arrangements will span a five-year period "to ensure stability and predictability" and "enable the NHS and industry to develop and manage their financial and investment plans", as well as allow the industry to "plan and prioritise research in areas which can deliver the greatest potential benefits to patients and society". 

The intention is that these new arrangements will be "stable and not bureaucratic", and though the details are still thin on the ground the government insists that companies will be "able to predict well in advance how prospective products are likely to fare". 

The system will work on the assumption that companies will set launch prices for new medicines at a level "that is close to their expected assessed value", and the management of cases where the list price of a product is not supported by its value assessment "will be considered during the negotiations".  

The government maintains that its objectives for value-based pricing include improving outcomes for patients through better access to effective medicines, stimulating innovation and the development of high value treatments, bettering the process for assessing new medicines, and ensuring value for money for the NHS.

Benefits unclear?

However, it seems industry remains to be convinced. ABPI chief executive Stephen Whitehead said just days ago "we are not convinced that value-based pricing will encourage innovation or reward the most effective medicines", and voiced concern that it could "stifle innovation because it will struggle to accurately reflect the inherent gradual and incremental nature of innovation". 

He also said it is still unclear whether value-based pricing can provide the pharmaceutical industry "with sufficient reward to allow for further investment in the research and development of new medicines".

And given that medicines in the UK are among the lowest priced in Europe, he argues that "promoting innovation would be better served by developing a pricing scheme that is flexible, holistic, negotiated in a single agreement and which rewards the discovery of new medicines”.