UK aims to slice drug prices 10%

A pharma nightmare with an English accent: The UK government wants to slash prices for prescription drugs by 10 percent. Sources told the Financial Times that officials are seeking a $2 billion-plus reduction off the current $21.7 billion annual spending on meds.

On the record, Health Minister Alan Johnson said he's aiming for "substantial savings" in the National Health Services' drug budget by the time a new agreement with drug companies is finalized in June. The drug-budget cuts would be part of an overall cost-reduction plan for the ministry, which has been directed to cut its spending by 3 percent per year.

Drug makers, of course, are none too cheerful about the prospect. The new cuts would come on top of a 7 percent discount in prices that went into effect in 2005, under a pricing deal that was supposed to be valid through 2010. The Financial Times says that pharma may endorse the idea of taking "branded generics"--or brand-name drugs already off patent--out of the pricing scheme. But that concession would have to be matched by the government, namely higher prices for new drugs and quicker adoption of new-to-market products.

- read the report in the Financial Times