UK Branded Drug Pricing Arrangements from 2014

The UK department of health and the ABPI (Association of the British Pharmaceutical Industry) have set the groundwork for discussions over the new pricing structure for medicines in the UK, which will come into force in 2014 after the current Pharmaceutical Price Regulation Scheme (PPRS) scheme finishes.

In a joint statement released Friday they confirmed that talks surrounding the shape of the new framework, which will include a new system of value-based pricing, will kick off in September.

The aim is for the new arrangements to be “stable and not bureaucratic,” and the government asserts that businesses will be “able to predict well in advance how prospective products are likely to fare.”

The system will operate on the notion that organisations will set launch prices for new medicines at a rate “that is close to their expected assessed value,” and the management of cases where the list price of a product is not held up by its value assessment “will be considered during the negotiations.”

So far, it is pictured that value-based pricing will mainly apply to medicines approved from 2014; although a minor number of existing drugs might also be evaluated, such as some medications which are currently paid for by the Cancer Drugs Fund.

Pricing for all products licensed in the UK or the EU before 31st December 2013 will fall under a scheme “similar but not identical” to the Pharmaceutical Price Regulation Scheme.

It has now been agreed by the government and the ABPI that the new arrangements will last five years “to ensure stability and predictability” and “enable the NHS and industry to develop and manage their financial and investment plans,” as well as to provide the industry time to “plan and prioritise research in areas which can deliver the greatest potential benefits to patients and society.”

Although the government insists that their objectives for value-based pricing include improving outcomes for patients through better access to effective medicines, stimulating innovation and development of high value treatments, the industry appears to remain unconvinced.

ABPI chief executive Stephen Whitehead commented that they “are not convinced that value-based pricing will encourage innovation or reward the most effective medicines,” and have raised concern that the changes could result in stifling “innovation because it will struggle to accurately reflect the inherent gradual and incremental nature of innovation.”

Whitehead added that it is still uncertain whether value-based pricing can deliver the pharmaceutical industry “with sufficient reward to allow for further investment in the research and development of new medicines.”


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