A new Pharmaceutical Price Regulation Scheme (PPRS) came into effect in the U.K. on January 1, 2009. The 2009 PPRS represents the latest version of the voluntary system which has been negotiated from time to time by the U.K. Department of Health and the Association of the British Pharmaceutical Industry (ABPI) since 1957. The PPRS represents an attempt to balance incentives for innovation with cost and price restraint.

The PPRS is unique among pharmaceutical price regulatory systems in that it is based on a system of profit controls and is negotiated as a voluntary agreement between government and the pharmaceutical industry. The objectives of the 2009 PPRS are:

  • To deliver value for money; securing the provision of safe and effective medicines at reasonable prices;
  • To encourage innovation by promoting a strong and profitable pharmaceutical industry;
  • To promote access and uptake for new medicines; and
  • To provide a stable and predictable market environment.

The PPRS contains measures affecting prices, profits and other factors. Some of the important new features are provisions aimed at encouraging and rewarding innovation and encouraging the uptake of cost-effective medicines. According to a joint letter from the Department and ABPI, these measures include a single horizon scanning process for new drugs in development, with more systematic industry involvement; prescribing incentives and other levers to promote the uptake of innovative medicines; and publication of data on the uptake of clinically and cost effective medicines.

The pricing provisions of the 2009 PPRS continue some measures from previous years and introduce new measures intended to ensure that access to medicines reflect their value to patients. The highlights of the pricing measures include:

  • Free pricing of new active substances will continue; manufacturers are free to establish the initial launch price;
  • Flexibility for a manufacturer to increase or decrease the original list price if new evidence or new indications change the value of the medicine to patients following an appraisal by the National Institute for Health and Clinical Excellence (NICE); "NICE will not negotiate or publicly set or indicate prices;"
  • Patient access schemes, designed by the manufacturer and agreed to by the Department to provide financial offsets or other considerations to allow patient access to medicines which have not been initially assessed as clinically or cost effective by NICE; these schemes, which should be "the exception rather than the rule," may be financially or outcomes based and could include risk sharing agreements;
  • There will be a price cut for existing medicines of 3.9% effective February 2009; manufacturers will be able to "modulate" that reduction, i.e., to apply higher or lower reductions for specific drugs provided they meet the overall target for the company;
  • Subject to further discussion and agreement, a form of generic substitution may be introduced by 2010.

The 2009 PPRS also includes dispute resolution mechanisms. The PPRS will run for a minimum of five years and both parties have agreed that they may not unilaterally opt to terminate or renegotiate the agreement earlier.

For links to the PPRS and related documents, please visit: http://www.dh.gov.uk/en/Healthcare/Medicinespharmacyandindustry/
Pharmaceuticalpriceregulationscheme/index.htm

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