NHS overpaying for drugs by millions, says OFT

Under the current Pharmaceutical Price Regulation Scheme (PPRS) used to set prices, the NHS spends about GBP8 billion a year on branded prescription medicines. The study said that some drugs currently prescribed in large volumes are up to 10 times more expensive than similar substitute treatments.

The study recommends that the current ‘profit cap and price cut’ scheme, where companies are free to set their own prices within very broad profit constraints, be replaced with a patient-focused value based pricing scheme, in which the prices the NHS pays for medicines reflects the therapeutic benefits they bring to patients.

The OFT estimates that this would release in the region of GBP500 million of expenditure that could be used more effectively, giving patients better access to medicines and other treatments which they may currently be denied. The study also claims that value-based pricing would give companies stronger incentives to invest in drugs for those medical conditions where there is greatest need.

However, the Association of the British Pharmaceutical Industry (ABPI) strongly refuted the claims that the NHS is paying too much for its drugs. In a statement, the industry body said that prices are on a par – or lower – than those of comparator European countries.

Dr Richard Barker, director general of the ABPI, said: “It is important that any new system does not delay patients’ access to new medicines and that it should not lead to major increases in costly bureaucracy and red tape. The current system has delivered major benefits to patients, the NHS and the UK as a whole and we expect Government to consider very carefully proposals to make wholesale changes to it so that those advantages are not put at risk.”