U.K. officials are finally taking the wraps off their new drug-pricing plan. The pharma industry has been waiting for the update to go public--but branded drugmakers are likely to wish they could wait longer. Under the new 5-year agreement, drugmakers will suffer new spending caps beginning next year.
It could have been worse; Germany, for instance, has decided to set its mandatory pricing discount at 7% for the long term, rather than back off by 1 percentage point in 2014. But prices are just one source of frustration for pharma in the U.K., where cost-effectiveness gatekeepers are known for their rigorous review of new drugs--and their willingness to reject those it considers too expensive. Drugmakers and patients alike complain that NICE puts too many drugs out of reach and that uptake of new products in the U.K. is too slow.
Under the plan, drug companies agreed that the overall bill for their patented products will remain steady in 2014 and 2015. For the remaining three years, increases are capped at 2%. The idea is for drugmakers to offset price increases on new products with discounts on older drugs, the Financial Times reports. Previously, drug prices had been growing at 5% a year, the government says. Generic drugs aren't covered by the caps.
Drugmakers signed onto the plan, known as the PPRS, or pharmaceutical price regulation scheme. But as the FT notes, their endorsement came under threat of worse; the government will hit companies that didn't sign up with a 15% cut in prices.
"The bill for branded medicines will now grow at an agreed level, the [National Health Service] will spend up to the agreed amount and any cost above that level will be absorbed by the industry," the Department of Health said in a statement.
The National Institute for Health and Care Excellence, the agency which reviews new treatments, will take a broader view under the new PPRS. The agency can begin considering the public health benefits of medicines, rather than a strict cost-effectiveness analysis. The new evaluation framework will take effect in autumn 2014, the DH said in its statement.
That, presumably, is the sweetener Health Secretary Jeremy Hunt refers to in the statement. "U.K. pharmaceutical companies have responded to the challenges we face as a country, both in terms of the increased demand for medicines and pressure on public spending," Hunt said. "I hope in return we have given them the certainty and backing they need to flourish as a sector both here and in the global market."
- get the DH statement
- read the FT story (sub. req.)
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