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Health Dept prescription medicines pricing shake up descends into chaos

Plans to introduce a new system for setting the price of prescription medicines have been thrown into chaos by the Department of Health, potentially costing the health service tens of millions of Pounds.

A joint memo circulated this week by the department and the Association of the British Pharmaceutical Industry, the trade body, warns that there will now be a delay of at least three months in implementing one part of the arrangement negotiated with industry over the summer.

In spite of having had months to prepare for the new arrangement, which had been due to come into force by the start of next year, the Department of Health has also failed to develop a system to monitor drug prices systematically, which is essential for implementing another part of the new deal.

The moves are fresh blows to relations between the pharmaceutical sector and the government, which sparked industry ire last year when it unilaterally decided to scrap the present Pharmaceutical Pricing Regulation Scheme, which determines how drug prices are set.

One pharmaceutical industry official said the issue was causing a “furore” in the sector and said it would take at least several weeks to clarify the full implications and how to respond.

The memo circulated last week says that industry will not now be expected to cut the price of off-patent branded medicines from January 1, as had been previously agreed, since the department decided it needed to hold a public consultation on the issue.

In the short term, the uncertainty means that the NHS will be sacrificing an estimated £80m in annual savings from price cuts in these so-called branded generics or “loss of exclusivity” medicines.

But the delay also creates uncertainty over how to implement the entire PPRS deal, which gives companies flexibility over how much they charge the NHS for individual medicines, provided there is an overall price cut of 5 per cent in the £8bn annual total.

Under the agreement reached with the pharmaceutical industry this summer, 3.9 per cent of the annual savings were des-igned to come from price reductions on patented medicines, and a further 1.1 per cent from the off-patent brands.

The new deal was supposed to reduce the price of branded generic drugs to 1.5 times the government’s reimbursement level set for generic medicines. Generic drug manufacturers fear they may lose out if this ratio is modified as a result of the latest department consultations.

A second aspect of the PPRS raises the possibility of fresh price cuts, on top of the 5 per cent scheduled for the start of this year, if drug prices rise too fast.

From:
http://www.ft.com/cms/s/0/de162cfc-a099-11dd-80a0-000077b07658.html?nclick_check=1

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