In the UK, the Department of Health has laid out plans confirming that the National Institute for Health and Care Excellence will be responsible for assessing new drugs as part of value-based pricing in six months' time.

VBP will be introduced in January 2014, and NICE will work with patient groups, the National Health Service and the pharmaceutical industry to link the price of a newly-approved drug to its value. This will be "based on the best available evidence and will be as transparent as possible", the  DoH said.

Health minister Lord Howe said that "we cannot simply spend more and more on drugs - this would mean spending less and less elsewhere". He added that a treatment "that brings a lot of extra benefits may justify the NHS paying more, but equally the NHS might pay less for a drug that does not deliver wider benefits".

Lord Howe went on to say that the government has worked extensively with the pharmaceutical industry, the NHS, patient groups and NICE to develop a way to allow medicine prices to more accurately reflect their value to society "and this work will now help to inform NICE’s work going forward".

Societal benefit

The price watchdog's chief executive Sir Andrew Dillon said "we welcome these new terms of reference from the DoH and look forward to engaging with our partners on how best to apply them in our evaluation". For example, he added that when NICE looks at the value of a drug, "it might consider whether that treatment may mean patients need less support from carers", resulting in a wider societal benefit.

Commenting on the move, Myeloma UK chief executive Eric Low said "I am very pleased that NICE will have the central role in the broader value assessment of new treatments", adding that his is something his organisation has called for since the initial consultation on VBP. "Their expertise in doing these types of complex assessments is second to none and I am very confident they will not only do it well but will evolve and improve their assessment methods".

Mr Low added that most importantly, "patients will be firmly at the centre of these broader assessments of value and that discussions and outcomes will not be determined solely by a bilateral agreement between government and industry".

Cuts of 10%-20% for some branded drugs

The DoH has also launched a consultation to strengthen the statutory pharmaceutical pricing scheme, which covers the prices the NHS pays for branded drugs not covered by the voluntary Pharmaceutical Price Regulation Scheme (PPRS). The consultation is seeking views on a price cut of between 10% and 20% "to ensure the NHS is getting good value for money" and the DoH  added that it will continue to negotiate with industry on the voluntary PPRS.

Stephen Whitehead, chief executive of the Association of the British Pharmaceutical Industry, noting that the statutory scheme applies to 10% of the branded medicines used in the UK, said prices in the UK are amongst the lowest in Europe "and the DoH’s own research confirms this in their PPRS report to parliament", published last year. However, "compared with our European counterparts, we continue to struggle at getting the latest and most innovative medicines to patients".

He conmcluded by saying that "the proportion of the NHS budget spent on new medicines is set to fall in real terms over the coming years to the extent that by 2015, medicines launched in the next three years will account for less than 2% of the total medicines bill".