NHS Confederation chief executive Nigel Edwards has ripped apart the government's proposals for value-based pricing, questioning its ability to deliver on promises such as encouraging innovation and reducing inequalities. 

Back in December the government unveiled its plans for value-based pricing - which is to replace the current Pharmaceutical Price Regulation Scheme when it expires in 2014 - and has opened a consultation on its ideas. 

Under the new system, it is envisaged that the National Health Service will pay for medicines based on an assessment of its value, determined by the benefits for the patient and society as a whole, unmet need and therapeutic innovation. 

The idea is, that such a scheme will help to equalise the provision of medicines throughout the country and thereby eradicate the postcode lottery of care, as well as incentivise research and drive innovation while giving the NHS better value for money.

But in an article published by the Health Services Journal, Edwards has raised concern with many aspects of the VBP proposals. 

For one, he says, the policy doesn’t set a value-based price for drugs, but a maximum ceiling price that the health service is prepared to pay. "What one might have expected is a target cost per quality adjusted life year with drug prices adjusted to a level that achieved this," he noted.

In addition, it seems that VBP will only be applied to new drugs (new active substances) coming onto the market, while everything else will remain subject to a revised PPRS scheme. "The fact that a price for a drug will be based on an estimation of value does not mean that it is rational to spend money on it if alternative drugs or treatments provide greater benefit for a patient at a lower cost. So, there could be far better alternatives for commissioners to spend their money on", he points points out.

Encouraging innovation - really?

In terms of innovation, the government argues that paying a premium for this will incentivise research. "But the UK equates to a mere 3.5% of the global pharmaceutical market and the idea that a premium on just one product in an already small market will increase research and development may be overly optimistic," Edwards argues. 

Moreover, he points out that rewards for getting a new drug onto the market come from products sales, so "rewarding innovation, regardless of the almost impossible task of defining it, looks unnecessary".

Edwards also questions how the policy will address: different response rates to a particular drug; medicines, such as Roche's Avastin, that have multiple uses; and what happens when clinical practice changes opinion on a drug's effectiveness or cost. 

Crucially, while the reforms are designed to cut back on postcode prescribing, the fact that 250 or more commissioning consortia will be making individual purchasing decisions could well mean they will have the opposite effect, Edwards warns, and says the government's consultation "has raised more questions than it answers". 

“There are lots of unanswered questions about Value Based Pricing", a spokesman for the Association of the British Pharmaceutical Industry told PharmaTimes UK News.

"We do, however, disagree with the view that a new system for drug rationing is needed. The vision for Value Based Pricing is to improve patient access to cost-effective medicines. Medicines in the UK are among the cheapest in Europe, yet the UK lags behind in the uptake of new innovative medications and in some patient survival rates – for example cancer". 

"While we agree that other issues such as earlier diagnosis are crucial, it is the whole patient pathway that needs to be viewed in a holistic manner – it should not be an either or situation,” the spokesperson stressed.