Unsurprisingly, the pharmaceutical industry has reacted with some alarm to yesterday’s report from the UK government's healthcare watchdog which said that the National Health Service is paying too much for branded pharmaceuticals and a major overhaul of the system is needed.

The Office of Fair Trading claimed that the Pharmaceutical Price Regulation Scheme should be reformed "to deliver better value for money from NHS drug spend and to focus business investment on drugs that have the greatest benefits for patients." However its findings have been challenged by pharmaceutical firms, analysts and trade associations alike.

The Association of the British Pharmaceutical Industry said that it “shares the desire of the NHS to deliver value for money, and is willing to discuss with Government how the PPRS should evolve while avoiding delays to patients’ access to new innovative medicines” but “strongly refuted suggestions that the NHS is paying too much for its drugs.”

It adds that in fact medicines in the UK “represent excellent value for money, and prices are on a par, or lower, than those of comparator European countries,” adding that the PPRS has produced £1.2 billion savings for the NHS, according to the National Audit Office. The ABPI went on to list some figures to support its claim, noting that primary care medicines accounted for 11% of NHS costs in 2005 – the same proportion as ten years ago, prices are 21% lower in real terms than ten years ago and the cost of medicines averages 56p per person per day compared with expenditure of 89p on alcohol and 74p on dining out.

The association also noted that medicines launched as first-in-class “almost invariably attract a lower price in the UK compared with average prices in France, Germany, Italy, Spain and the Netherlands” while drugs newly launched into established classes also attract a lower price than the five countries cited.

The ABPI said that the OFT is proposing that any changes are made to the PPRS at the time of its renegotiation in 2010, when the current five-year agreement expires and warned that a system of product-by-product price setting of new medicines when they are launched, favoured by the OFT, “has resulted in significant delays for patients waiting for innovative treatments in some other countries. Also, proposals that appear to link branded and generic prices in a form of reference pricing “have failed to work in other countries.”

Richard Barker, director general of the ABPI, added that it is important that any new system does not delay patients’ access to new medicines “and that it should not lead to major increases in costly bureaucracy and red tape.”

GSK wants safeguards for innovation

GlaxoSmithKline also gave its backing to the PPRS which “continues to provide a foundation for a stable framework which aims to ensure access to affordable new medicines while encouraging high-risk innovative research.” In doing so, “it has enabled the UK and the industry to adopt a long-term approach to developing new medicines, a critical factor for successful discovery of new treatments,” the firm added,

GSK recognised that improvements can be made to the existing scheme but any changes made “must be practical, allow flexibility and be evolutionary in nature.” The firm concluded by saying that it does not believe that any solution “should depend on mechanistic approaches that attempt to crudely categorise medicines based merely on their molecular make-up. These models fail to recognise the very real impact that apparently similar treatments can have on patients in the real world.”

Dr Steve Arlington, leader of PricewaterhouseCoopers’ pharmaceutical advisory practice, also commented on the report, saying that the PPRS system ”has been serving the UK pharmaceutical industry and government for 50 years so the OFT enquiry is timely.” He notes that the report suggests that the scheme was becoming increasingly out of date “and has set out a blueprint for fundamental change” but warns that “the different options for the proposed transition will need to be very carefully thought through as any change is not without risk."