UK govt to hit pharma with 10% price cut

The UK government is planning to cut the National Health Service's prescription drug budget by 10% from a current estimate of about L11.0 billion ($21.88 billion). Alan Johnson, the Secretary of State for Health, told the Financial Times that he plans to obtain the price cut in talks over the future of the Pharmaceutical Price Regulation Scheme, which is already under review following a critical report by the Office of Fair Trading (Marketletter August 13, 2007).

The PPRS provides a structure for a five-year price plan for drugs bought by the NHS. Although there is some tension between US drugmakers over the value of the scheme, the position of the Association of the British Pharmaceutical Industry is that "predictability and stability" in drug prices encourages innovative investment in the UK.

However, the British Medical Journal reported last year that "the old dual and conflicting role of NHS pricing, aimed at getting the health service a reasonable deal as well as supporting an industry that the government cares about deeply...looks to be over."