Industry issues drug price warning ahead of talks with DH

Drug companies have said they are concerned about DH plans to base prices of drugs on their value to the NHS, just weeks before negotiations over the plans begin.

Drug pricing: industry warns value-based pricing could 'stifle innovation'
Drug pricing: industry warns value-based pricing could 'stifle innovation'

The warning came ahead of a joint statement from the DH and the drug industry which suggested there are divisions between the two bodies’ views of future drug pricing.

From January 2014, the price of new drugs will be based on the basis of each drug’s value to the NHS, with negotiations over the details of these plans due to start in September.

Last week, the Association of the British Pharmaceutical Industry (ABPI) said it was concerned that value-based pricing would hamper innovation. ABPI chief executive Stephen Whitehead said that the association was ‘not convinced that value-based pricing will encourage innovation or reward the most effective medicines’.

‘In fact, we are concerned that value-based pricing could in fact stifle innovation because it will struggle to accurately reflect the inherent gradual and incremental nature of innovation,’ he said.

Mr Whitehead argued that innovation would be better served by developing ‘a pricing scheme that is flexible, holistic, negotiated in a single agreement and which rewards the discovery of new medicines’.

After Mr Whitehead made his comments, the DH and ABPI released a joint statement about drug pricing after 2014 that suggested differences between the DH’s and ABPI’s view.

The ‘joint’ statement included details of the government’s specific objectives for value-based pricing, but not those of the pharmaceutical industry. The statement also included only the DH’s intentions of when pricing assessments would be made and how close to final prices those set at launch should be.

The joint statement revealed that value-based pricing would be phased in, being ‘introduced in a planned and progressive way’. It also said that the NHS will have to fund any drug that has ‘successfully come through a value-based pricing assessment’, as health trusts are currently required to do for drugs recommended by NICE.

The DH and ABPI also made it clear that value-based pricing, which will apply to new medicines, will be considered separately from any agreement about prices of other branded drugs.

Prices of most drugs available before 2014 will be decided as part of the scheme that succeeds the current pricing agreement, the Pharmaceutical Price Regulation Scheme (PPRS). Some older medicines may also be assessed under the value-based pricing scheme, the statement said.

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