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
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
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.
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