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Joe Collier: A stab at future UK Drug Pricing Policy

3 Jul, 08 | by BMJ Group

Professor Joe CollierWe are now into the fifth month of the negotiations to reform the secretive and perverse (and essentially discredited) UK Pharmaceutical Price Regulation Scheme (PPRS), and we can safely assume that the discussions will be hotting up as the new terms must be in place by the beginning of September.

There will already be broad agreement amongst the parties and hints about the final position are being dropped through press releases, articles, interviews and consultation papers.

None tell the whole truth and observers are left to unravel the ‘facts’ from messages that seem aimed at an internal audience as they often appear, for example, to threaten, to appeal, to shroud wave, to cry foul, or simply to divert. Nevertheless a picture is developing and here is my take.

The new system will be non statutory (industry is delighted with this) with the companies proposing a launch price for each new product. NICE will do a cost effectiveness and clinical effectiveness analysis (as they do in their technology appraisals now) but this will be done between the time of licensing and launch (this will give NICE around 4 months on average).

Essentially each and every new product will be dealt with in this way so selective reviewing will be a thing of the past (currently NICE only appraises a proportion of new drugs). After the initial analysis NICE will inform the company whether they intend, at the price proposed, to recommend that the product be used in the NHS.

At this stage there will be space for negotiation in which some lowering of the price, for instance, could make the product acceptable. If the price remained ‘too high’, NICE would obviously be unable to recommend its use.

Assuming this is the new approach, essentially we will have a fourth hurdle along the lines used in Australia. Moreover the approach would be in keeping with the recommendations of the Office of Fair Trading which wanted each drug to be priced according to its clinical value – an approach close to that which NICE already uses and with which it has vast experience.

The degree to which NICE can negotiate, and the position the Institute will take when comparing a new drug with a cheaper off-patent alternative must be taxing those involved in reforming the PPRS. In addition, discussions must be going on as to how best to integrate the ‘England’ position with that taken in Scotland. Clearly we cannot have drugs priced differently in the two countries.

What a relief it will be if (unlike in the present scheme) drug prices are negotiated for each drug separately and reflect their clinical value. Moreover, no longer will there be  secret factors linked into the price such as ‘brownie’ points for research activity, innovation, investment in the UK etc. By September 1 all will become clear.             

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  • Anna Donald

    Thank you Joe for this clear summary of a subject dear to my professional heart. If all happens as you say – what a feat! To have a rational and specific system that matches price with value – even if it’s not perfect – would be a vast improvement on the current system which still delivers totally unacceptable year-on-year technology inflation and, in economic terms, systemic dead-weight-loss. Will look forward to further updates.

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