PPRS comes under the competition spotlight

The OFT announced on 13 September 2005 that it is to carry out a "market study" into the Pharmaceutical Price Regulation Scheme (PPRS). A market study is the first stage in a process, which can have a number of different outcomes, but what is sure is that the PPRS will now be carefully scrutinised for its ability to meet the needs of patients while providing the taxpayer with value for money.

The PPRS is a voluntary scheme, which sets a cap on the profits that drug companies can make on sales of branded medicines to the NHS. It is renegotiated every five years. The scheme aims to strike a balance between providing the NHS with safe and effective medicines at reasonable prices while also incentivising the pharmaceutical industry to develop new and improved medicines. The OFT study aims to assess how effectively it does this. Healthcare and the interaction between government and markets are two of the OFT’s stated priority areas.

The OFT noted that its decision to launch the study follows its previous study on the impact of public procurement on competition (published in September 2004). It added that the study would last until at least spring 2006 and may continue until the end of 2006 depending on what is revealed.

Depending on the study’s findings, the OFT may:

• decide no changes to the scheme are required

• recommend the Government consider changing the scheme

• refer the PPRS to the Competition Commission for a more in- depth study

• take enforcement action if it finds breaches competition law.

For the OFT’s press release on this, please click on or copy/paste the following link:

http://www.oft.gov.uk/News/Press+releases/2005/171-05.htm

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

The original publication date for this article was 14/09/2005.