Will drugmakers' ability to set their own prices in the UK soon come to an end? It could be, under a proposal now being floated by the new coalition government, Pharmalot reports. Officials say they're considering a "value-based pricing" model, but details of the proposal so far are scarce (or perhaps nonexistent).
The UK is one of the last markets on the globe where drug companies get to set their own prices. Under the country's current drug-pricing rules on the National Health Service, profits are regulated, not prices, Reuters reports. There's some downward pressure on prices, however, in the form of the National Institute for Health and Clinical Excellence, which evaluates medications for cost-effectiveness.
The new government says it's aiming to reform NICE and move to "value-based pricing." It's not yet clear just how those values would be determined, but analysts don't like it. "A price-control policy has not been fleshed out... but the fact that it has been mentioned... should be considered as the main--and perhaps inevitable--threat to the pharmaceutical industry in the U.K. going forward," IHS Global Insight analyst Milena Izmirlieva told Reuters.
The worry seems to be that value-based pricing could morph into full-on price controls. Morgan Stanley analysts called the idea "a wolf in sheep's clothing," saying it's bound to be negative for pharma in the long run. And depressed prices in the U.K. could have a ripple effects, as Reuters notes, because other countries often use U.K. prices as a reference point for setting their own.