Pharma, UK cut drug cost deal

Written byElie Dolgin

| 2 min read

The British government and the pharmaceutical industry have struck a deal to allow flexible drug pricing arrangements, a scheme which could shave millions of pounds off the total amount that the government-funded National Health Service (NHS) pays for drugs, according to the linkurl:BBC.;http://news.bbc.co.uk/2/hi/health/7737027.stm Under the agreement, companies can introduce new drugs to the NHS formulary at lower initial prices, with the option of charging more if the meds prove effective. The deal is expected to save the NHS around £350 ($525) million for the next two years and around £550 ($820) million every year thereafter. The scheme imposes a 3.9% price cut for drugs sold to the NHS in February 2009 and a further 1.9% price cut in January 2010. For companies with sales of less than £25 ($37) million in 2007, however, the first £5 ($7.5) million in sales will be exempt from the price cut. These price reductions follow a 7% cut on linkurl:prescription medicines;http://www.the-scientist.com/article/display/19289/ imposed on UK pharma in 2005. The plan is also expected to allow pharmacists to sell linkurl:generic drugs;http://www.the-scientist.com/article/display/15551/ even when a doctor has prescribed a brand name version, although further consultations are still ongoing. The new cost-cutting measures add to a voluntary pricing arrangement known as the linkurl:Pharmaceutical Price Regulation Scheme,;http://www.dh.gov.uk/en/Healthcare/Medicinespharmacyandindustry/Pharmaceuticalpriceregulationscheme/index.htm which the government and industry agreed upon in June. The scheme still maintains the freedom of companies to set prices themselves, with an independent resolution mechanism in place to settle disputes. "The flexible pricing scheme agreed [upon] will ensure that medicines fairly reflect their value to patients, branded drugs will see their price cut, and industry innovations will be encouraged and rewarded," the linkurl:Association of the British Pharmaceutical Industry;http://www.abpi.org.uk/ and the linkurl:Department of Health;http://www.dh.gov.uk/en/index.htm wrote in a joint linkurl:press release.;http://nds.coi.gov.uk/Content/Detail.asp?ReleaseID=384674&NewsAreaID=2 "While we do not accept the case for further price reductions of branded medicines, in addition to the 7% price cut in the 2005 agreement, this new agreement offers room for optimism and the promise of benefits for the NHS and patients, and also for the pharmaceutical industry in the UK," Philippa Rodriguez, linkurl:AstraZeneca's UK;http://www.astrazeneca.co.uk/ marketing company president, wrote in a statement sent to __The Scientist__. Last year, the linkurl:Office of Fair Trading,;http://www.oft.gov.uk/ Britain's consumer and competition authority, reported that the NHS spent up to £500 ($750) million annually on overpriced drugs. In FY2006/07, the NHS's total drug bill was over £10 ($15) billion, or around 13% of its annual budget.

Pharma, UK cut drug cost deal

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