At a glance: Pharmaceutical Price Regulation Scheme

PPRS – is that the new price reduction on branded medicines? That’s the one. The Government announced this month that the NHS would pay seven per cent less for its branded, prescription medicines from manufacturers that have NHS sales above £1m, effective from 1 January.

So will pharma firms now put less money into PR for their branded drugs used in the NHS?

It may not be as simple as that. Despite what sounds like an across-the-board cut, there is some room for manoeuvre: firms can reduce prices between individual products as long as it is equivalent to an overall company price cut of seven per cent. There may be little immediate effect on specific brand PR budgets at pharma firms.

How has the pharma industry reacted to the new PPRS?

By putting a brave face on it. The ABPI says there are some benefits to the new deal and urges member firms to accept it as the best solution available.

Not exactly a ringing endorsement?

True. In fact, ABPI president Vincent Lawton says the price cut is ‘unnecessary’.

How does he work that out?

Because he says medicines’ prices have fallen in real terms by 15 per cent over the last decade while the NHS medicines budget is steady at about 12 per cent of expenditure.

If that’s the case, what are the benefits for pharma companies?

The ABPI admits that the five-year agreement offers stability on pricing, makes the UK a single-pricing entity and says there is still this freedom to price individual medicines within the scheme’s overall constraints. And it adds that the PPRS recognises the need for drugs companies to invest in research and development.

What’s the aim of the PPRS?

The Government and ABPI want to provide safe, effective drugs to the NHS at reasonable prices while allowing the pharma industry to grow. The scheme is also meant to promote the competitive supply of medicines to pharma markets in the UK and abroad.

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