• Press Office

    Posted in category News Release by Press Office on 20/02/2007

    OFT Study: UK medicines prices provide good value for money for NHS

Proposals made by the Office of Fair Trading on a revised pricing system for branded, prescription medicines sold to the NHS will be considered by the industry, said the Association of the British Pharmaceutical Industry (ABPI) – but it strongly refuted suggestions that the NHS is paying too much for its drugs.


​The pharmaceutical industry supports the desire of the NHS to deliver value for money, and is willing to discuss with Government how the Pharmaceutical Price Regulation Scheme (PPRS) should evolve while avoiding delays to patients’ access to new, innovative medicines.

However, medicines in the UK represent excellent value for money, and prices are on a par – or lower – than those of comparator European countries. The current system that controls medicines prices in the UK, the PPRS, has produced £1.2 billion savings for the NHS, according to the National Audit Office.

Other key points include:

  • Primary care medicines accounted for 11 per cent of NHS costs in 2005 – the same proportion as ten years ago.
  • Prices are 21 per cent lower in real terms than ten years ago.
  • The cost of medicines averages 56p per person per day compared with expenditure of 89p on alcohol and 74p on dining out.
  • Advances in medicines have helped free hospital resources by halving admissions for major illnesses (e.g. mental illness, infectious diseases and ulcers). The consequent annual saving of nearly £11 billion is more than the cost of all NHS medicines.
  • Newer medicines launched as ‘first in class’ – in other words, with no current therapeutically equivalent medicine yet available – almost invariably attract a lower price in the UK compared with average prices in France, Germany, Italy, Spain and the Netherlands. Most medicines newly launched into established classes attract a lower price in the UK compared to the average in those five countries.
  • Medicines that are not able to establish a clear therapeutic advantage over others treating the same condition tend to be priced at a discount to their competitors.

“These facts clearly demonstrate that the UK gets its life-improving and –saving medicines at a fair and reasonable price, and that the broad assertions that the OFT has made in launching its study are wrong,” said Dr Richard Barker, Director General of the ABPI.

“However, the pharmaceutical industry wholeheartedly supports the desire of the NHS to deliver value for money, and we are ready to sit down with the Government to discuss ways in which this might be better achieved.”

The ABPI noted 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.

Nevertheless, the ABPI warned that a system of product-by-product price setting of new medicines when they are launched, such as that favoured by the OFT, has resulted in significant delays for patients waiting for innovative treatments in some other countries.

Likewise, OFT proposals that appear to link branded and generic (off-patent) prices in a form of “reference pricing” have failed to work in other countries and result in not only disincentives to improve therapy but also to reduce competition in generics.

It is also essential that the UK-based industry’s world-leading record of discovering new medicines – some 20 per cent of the world’s top medicines were developed in the country – is not put at risk. The current PPRS has brought a stability that is essential to an industry that operates in the long-term, and it is vital that this is maintained. The industry generates a conservative £7.5 billion a year to the country’s economy a larger number than the cost of its medicines to the NHS.

“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,” said Dr Barker. “The current system has delivered major benefits to patients, the NHS and the UK as a whole and we expect Government to consider very carefully proposals to make wholesale changes to it so that those advantages are not put at risk.”

For further information, please contact: ABPI Press Office +44 (0)207 747 1410


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