The Pharmaceutical Price Regulation Scheme Survives Again, UK

Main Category: Pharmacy / Pharmacist
Article Date: 13 Jun 2008 - 2:00 PDT

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The "word on the street" is that the UK Government and the ABPI, on behalf of the pharmaceutical industry, are close to agreeing a new "voluntary" Pharmaceutical Price Regulation Scheme (PPRS). An announcement could be made as early as next week.

The scheme was introduced in 1956 to regulate pharmaceutical prices in the UK. It began as essentially a "cost-plus" profit control scheme, and although it has been modified over the years it still retains many elements of that approach. The PPRS remains rooted in the past and fails both to deliver its stated objectives and to reflect the realities of the modern pharmaceutical industry. Jim Furniss, Bridgehead's Director of Market Access commented, "Fifteen years ago, when I was head of the pharmaceutical industry branch, I argued that with the introduction of prescribing budgets and GP Fund-holding the PPRS was no longer necessary or appropriate. GP Fund-holding is no more, but with the introduction of practice-based commissioning, the case for fundamental reform is now unanswerable."

The Office of Fair Trading (OFT), in its review of the PPRS published last year, reached a similar conclusion, and recommended that the current PPRS should be replaced by a new price control scheme founded on "value-based pricing". While there are serious methodological and other problems with the OFT's proposals, their report does at least demonstrate clearly that the PPRS is no longer "fit for purpose". So last summer the Government apparently seized the opportunity to implement reforms to the PPRS. However, all the indications are that their actions were opportunistic rather than strategic. They saw an opportunity to impose a significant price cut (which will go some way towards offsetting the reduced growth rate in NHS spending) at minimal political cost.

Thus it would appear that the new PPRS will look very much like the old one, but with lower prices. The government may take the opportunity to subject patent-expired brands to the generic pricing scheme, but they have been threatening to do that since 2005. They may promise to study value-based pricing and perhaps even to move towards it in three (or more likely five) years time. Otherwise, the opportunity for much needed reform provided by the OFT report will have been squandered.

Bridgehead International CEO, Timothy Fitzgerald commented that "Further downward pressure on pharmaceutical pricing in the UK will inevitably impact across Europe. Apart from countries such as The Netherlands and Belgium, where direct references to the UK are the norm, payers in many other markets refer to UK prices informally."

About Bridgehead International

Bridgehead International is a leading biopharmaceutical consultancy group, offering a range of services, designed to assist clients in achieving extraordinary growth across the product and technology value chain, through three practice areas:

- Market Access Solutions, including market assessments and development of pricing and reimbursement strategies.

- Technical and Commercial Evaluation, covering due diligence, expert's reports and decision support.

- Healthcare Education Services, focused on specialist medical education for those working in the pharmaceutical and biotechnology industry.

With over 50 consultants and associates in Europe, North America and Asia, Bridgehead provides a powerful combination of strategic, scientific, medical, technical, commercial, economic, decision support, modelling and intellectual property skills and experience.

Over the past four years Bridgehead's Market Access business has grown to be the single largest practice area in the company.

Whilst much of Bridgehead's work on pricing, reimbursement and market access is global in nature (US, top 5 Europe and Japan), the company is being increasingly asked to use its knowledge and experience to address US-specific issues, through:

- Payer research
- Therapy area scanning
- Pricing strategy for commercialisation
- Reimbursement negotiation strategy
- Product life cycle pricing strategy
- Pharmacoeconomic assessments
- Health technology assessment support

Bridgehead International

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