Bloomberg News

U.K. Seeks Drug Price Cuts of as Much as 20% Amid Budget Crunch

June 20, 2013

The U.K. Department of Health is seeking price reductions of as much as 20 percent on brand-name medicines as the government plans to save 11.5 billion pounds ($18 billion) in the 2015-16 spending year.

The cuts would apply to drugs not already covered by an existing agreement between manufacturers and the government known as the Pharmaceutical Price Regulation Scheme, or PPRS, the department said today in a statement on its website. The products outside the PPRS account for about 10 percent of the branded medicines used in the U.K., according to the Association of the British Pharmaceutical Industry.

The government, which runs the National Health Service and is the largest payer for medicines in the U.K., said it will also continue negotiating with the industry over the PPRS. Those talks will include how the results of a review by the health-cost adviser, the National Institute for Health and Care Excellence, would influence the price the NHS pays.

“We cannot simply spend more and more on drugs,” the Department of Health’s Under Secretary of State Frederick Curzon, who sits in the House of Lords as Earl Howe, said in the statement. “A drug that brings a lot of extra benefits may justify the NHS paying more, but equally the NHS might pay less for a drug that does not deliver wider benefits.”

The U.K. prices of medicines are among the lowest in Europe and already provide good value to the NHS, the Association of the British Pharmaceutical Industry said in a statement.

“The proportion of the NHS budget spent on new medicines is set to fall in real terms over the coming years to the extent that by 2015, medicines launched in the next three years will account for less than 2 percent of the total medicines bill,” the London-based group said. The talks on the PPRS are “ongoing and remain confidential,” it said.

The government’s public consultation on pricing will end July 31. The NHS is England’s largest employer with more than 1.4 million workers and accounts for about 109 billion pounds of the U.K.’s budget.

To contact the reporter on this story: Kristen Hallam in London at khallam@bloomberg.net

To contact the editor responsible for this story: Kristen Hallam at khallam@bloomberg.net


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