As the government consultation closes today (March 17) on its plans to introduce a new value-based system of pricing for branded medicines, "we now have three years in which to work through what a value-based pricing (VBP) system will look like," Health Minister Earl Howe has told Pharma Times.

Ministers will be conducting, over the next three months, what he hopes will be a "free dialogue" with the industry, medical professions and patient groups around such issues as what value looks like, how to assess value and who should do so, and how to ascribe a price. "Once we've reached a general understanding, this will lead to detailed negotiations with the pharmaceutical industry," he said.

A major benefit which will accrue to drugmakers from the move to VBP will be much greater predictability and confidence that drugs representing major therapeutic value will be appropriately rewarded, Earl Howe told Pharma Times.

Health Secretary Andrew Lansley "has absolutely no difficulty with the NHS paying a high price for genuine breakthroughs, but now price is often unrelated to therapeutic value," he said, and one problem is that value assessments currently do not take account of "things which we think they should," such as wider societal values. Doing so would be "a major step forward," he added.

The National Institute for Health and Clinical Excellence (NICE) has done "a really fine job over the last few years," but it has "struggled with this concept, and we need to wrestle some more with this in redefining value," said Earl Howe.

The price initially set for a drug under the proposed new system would not be fixed - it could be reviewed at a later date to reflect experience gained over time, and could then go up as well as down. However, problems could arise where there are different indications for the same drug, said the Minister.  And, he added, while "we shouldn't close our eyes" to the use of patient access schemes in the early stages of a drug's life when evidence is lacking, the government would want to minimise the use of such initiatives where it can.

Late last year, the government identified healthcare and life sciences as one of the first sectors for consideration under its Growth Review programme, and policy announcements are expected alongside the Budget on March 23. Earl Howe, who was speaking to Pharma Times at the NHS Innovation Expo held in London last week, added that the life sciences industry “can expect the spotlight to continue to fall on it for as long as this government in office."

While a great deal has already been done to make the UK an attractive location for the pharmaceutical industry globally,  "that is no reason to say that we shouldn't punch above our weigh at attracting R&D here," said the Minister. The UK has everything going for it - skills base, infrastructure, talent, fiscal incentives - and the NHS, which he described as "a unique test bed for new inventions."

In his address to the conference, Earl Howe emphasised that the UK has to innovate to way out of the current economic situation - it cannot afford not to, but also warned against "confusing the cost of something with its value."

The NHS is the world's largest integrated health care system, he said, and called for its services to be opened up to overseas customers.  "So long as UK patients are protected, why should the NHS not market itself to overseas patients?" he asked. "Why shouldn't our hospitals be competing with the Harvard Medicals and the Sloane Ketterings?"

Moreover, as a stronghold of innovation, the NHS should be selling more of its ideas and innovations in the global health care market, which is now worth $4.5 trillion a year, he added.  NICE is a big success here, he said - the Institute is now "the partner of choice for many health economies," providing advice on replicating its model to governments in Europe and the Middle East  worth £200 million a year.