By Ben Hirschler
LONDON, Dec 16 (Reuters) - The British government outlined plans on Thursday for a radical shake-up in drug pricing from the end of 2013 to ensure medicines used by the state-run National Health Service (NHS) offer value for money.
Drug prices have been under growing pressure across Europe this year, as governments tackle ballooning budget deficits, and drugmakers are concerned the change might cap returns and lead to delays in new treatments reaching the market.
Health minister Andrew Lansley said he recognised that speed of assessment and agreeing prices were important.
As a result, there would be scope for companies to make drugs available at a 'contingent' price. Contingent prices could be revised later in the light of further evidence of a drug's effectiveness, according to a government consultation paper.
The new scheme would apply only to new branded prescription drugs, since it would not be feasible to carry out a value-based assessment for each medicine already on the market.
The coalition government first announced in May that it wanted to move to a value-based system of drug pricing, triggering industry concerns that Britain might be heading for the sort of price controls seen elsewhere in Europe.
British drugmakers -- including GlaxoSmithKline and AstraZeneca -- argue the country already has some of the cheapest prices and one of the lowest rates of access to new medicines of any European country.
Richard Barker, director general of the Association of the British Pharmaceutical Industry, said companies were happy to show their drugs offered value but wanted assurance on access.
'The priority in any new system must be rapid and consistent patient access to new medicines -- value is meaningless without consistent access,' he said.
NEW ROLE FOR NICE
The new system will replace the current Pharmaceutical Price Regulation Scheme (PPRS) between the government and drugmakers, which will expire at the end of 2013.
The PPRS controls the prices of branded medicines by regulating the profits that pharmaceutical companies are allowed to make on their sales to the NHS. It is a flexible scheme that companies would like to retain.
But Lansley said the PPRS did not offer the best balance between offering industry reasonable prices and ensuring value.
'Value-based pricing will ensure that the prices the NHS pays for medicines are based on an assessment of value, looking at the benefits for the patient, unmet need, therapeutic innovation and benefit to society as a whole,' he said.
The new system will also revise the role of the National Institute for Health and Clinical Excellence (NICE), which currently recommends if drugs are cost effective for NHS use.
In future, the government would apply weightings to the benefits provided by new medicines, which would translate into a range of price thresholds reflecting a maximum acceptable price. NICE would no longer say 'yes' or 'no' to treatments but would still play a key role in assessing the economic benefits of drugs and providing advice on the relative effectiveness of different therapies.
The consultation is now open to comments for 13 weeks.
(Additional reporting by Tim Castle, editing by Kate Kelland and Mike Nesbit) Keywords: BRITAIN MEDICINES/ (ben.hirschler@thomsonreuters.com; Tel: +44 20 7542 5082; Reuters Messaging: ben.hirschler.thomsonreuters.com@reuters.net; www.twitter.com/reutersBenHir) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
LONDON, Dec 16 (Reuters) - The British government outlined plans on Thursday for a radical shake-up in drug pricing from the end of 2013 to ensure medicines used by the state-run National Health Service (NHS) offer value for money.
Drug prices have been under growing pressure across Europe this year, as governments tackle ballooning budget deficits, and drugmakers are concerned the change might cap returns and lead to delays in new treatments reaching the market.
Health minister Andrew Lansley said he recognised that speed of assessment and agreeing prices were important.
As a result, there would be scope for companies to make drugs available at a 'contingent' price. Contingent prices could be revised later in the light of further evidence of a drug's effectiveness, according to a government consultation paper.
The new scheme would apply only to new branded prescription drugs, since it would not be feasible to carry out a value-based assessment for each medicine already on the market.
The coalition government first announced in May that it wanted to move to a value-based system of drug pricing, triggering industry concerns that Britain might be heading for the sort of price controls seen elsewhere in Europe.
British drugmakers -- including GlaxoSmithKline and AstraZeneca -- argue the country already has some of the cheapest prices and one of the lowest rates of access to new medicines of any European country.
Richard Barker, director general of the Association of the British Pharmaceutical Industry, said companies were happy to show their drugs offered value but wanted assurance on access.
'The priority in any new system must be rapid and consistent patient access to new medicines -- value is meaningless without consistent access,' he said.
NEW ROLE FOR NICE
The new system will replace the current Pharmaceutical Price Regulation Scheme (PPRS) between the government and drugmakers, which will expire at the end of 2013.
The PPRS controls the prices of branded medicines by regulating the profits that pharmaceutical companies are allowed to make on their sales to the NHS. It is a flexible scheme that companies would like to retain.
But Lansley said the PPRS did not offer the best balance between offering industry reasonable prices and ensuring value.
'Value-based pricing will ensure that the prices the NHS pays for medicines are based on an assessment of value, looking at the benefits for the patient, unmet need, therapeutic innovation and benefit to society as a whole,' he said.
The new system will also revise the role of the National Institute for Health and Clinical Excellence (NICE), which currently recommends if drugs are cost effective for NHS use.
In future, the government would apply weightings to the benefits provided by new medicines, which would translate into a range of price thresholds reflecting a maximum acceptable price. NICE would no longer say 'yes' or 'no' to treatments but would still play a key role in assessing the economic benefits of drugs and providing advice on the relative effectiveness of different therapies.
The consultation is now open to comments for 13 weeks.
(Additional reporting by Tim Castle, editing by Kate Kelland and Mike Nesbit) Keywords: BRITAIN MEDICINES/ (ben.hirschler@thomsonreuters.com; Tel: +44 20 7542 5082; Reuters Messaging: ben.hirschler.thomsonreuters.com@reuters.net; www.twitter.com/reutersBenHir) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.