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Drug pricing

Price cut of 25% proposed for medicines on statutory scheme in England

The Department of Health is consulting on whether the maximum price of medicines on the statutory scheme should be reduced by a further 10 percentage points.

Department of Health proposes 25% price cut on branded medicines in England

Source: Alex Segre / Alamy

The Department of Health intends to align the statutory scheme with the voluntary Pharmaceutical Price Regulation Scheme (PPRS), which covers most branded medicines

The maximum price pharmaceutical companies can charge the NHS for branded medicines could be reduced by 25% under proposals by the Department of Health (DH) in England.

Changes to the statutory scheme implemented on 1 January 2014 introduced a 15% reduction in the maximum price of branded medicines on sale to the health service on 1 December 2013. A consultation is under way on whether the maximum price should be reduced by a further 10 percentage points.

The move was intended to align the scheme with the voluntary Pharmaceutical Price Regulation Scheme (PPRS). A further 10 percentage point reduction would deliver a 25% cut on the price on 1 December 2013.

The scheme was put in place to introduce statutory price limits on the sales of prescription only, branded health service medicines by companies that choose not to be members of the voluntary PPRS agreement between the pharmaceutical industry and the DH.

The latest PPRS scheme, which started on 1 January 2014, stipulates no growth in NHS expenditure on medicines in 2014 and 2015, capping the drugs bill at £12bn a year. Growth in spending in the following three years is capped at less than 2%. Any difference between the agreed expense and actual expense is paid to the NHS by the pharmaceutical industry.

As well as consulting on the possible 0-10 percentage point price reduction, the DH is considering strengthening the information requirements for enforcement under the statutory scheme. This may require companies to record information on actual prices of medicines, which they will be asked to share if the DH suspects a breach of the regulations.

The consultation closes on 7 November 2014. 

Citation: The Pharmaceutical Journal DOI: 10.1211/PJ.2014.20066856

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