UK OFT report provokes mixed responses from drugmakers

The report into the operation of UK's Pharmaceutical Price Regulation Scheme by the Office of Fair Trading has provoked a range of responses from the drug industry, with the biotechnology industry association offering broad support and the Association of the British Pharmaceutical Industry expressing disappointment at the perceived focus on cost, instead of recognising the full context of the PPRS mechanism (see page 11).

Perhaps the most unpopular drug pricing system that could be adopted in response to the OFT view that the UK is "overcharged" by L500.0 million ($974.0 million) per year, would be the German "jumbo" reference pricing system (Marketletters passim). According to Pamela Santoni, a senior principal at IMS Health and a speaker at The Economist's13th Annual Pharmaceuticals Conference, which was held on the day of the OFT report's announcement, the German model has led to some drugs not being supplied, including Pfizer's statin Lipitor (atorvastatin). Another unintended consequence of such price control systems is that a series of negotiations between price regulators and drugmakers is required if a drug is found to have additional therapeutic areas of marketability. If a drug is not first-in-class, there is no prospect of recouping R&D costs, which is all the more problematic as delays between competing drugs can be caused by unpredictable (eg regulatory) events.

Another speaker at the same event, Roch Doliveaux, chief executive of Belgium's UCB Group, expressed concern at any major changes to the PPRS. He said that he is mindful as UCB is the fifth largest pharmaceutical investor in the UK that "we should remind ourselves that in the 1960s and 1970s France and Germany were the top drug developing countries in the world." He added that the PPRS was a pricing scheme of which research-based firms in the rest of the European Union were envious.