Since September 2005, the OFT has investigated the system by which the NHS purchases drugs from the pharmaceutical industry. According to the BBC, a key recommendation is that the PPRS needs an overhaul as it does not allow the NHS to get the best prices.
The Pharmaceutical Price Regulation Scheme (PPRS) sets a cap on the profits that each drug company can earn selling its branded medicines to the NHS. The scheme is voluntary and renegotiated every five years.
This decision by OFT could have wide-reaching implications for drug companies because UK pricing is often used as a benchmark for the rest of Europe.
Drug companies may argue that lowering the price of their branded medicines will have a detrimental affect on healthcare with less money available for future research and development. Many within the pharmaceutical industry also feel that the price of branded medicines reflects the investment in carrying the product to launch.