On 23 February 2012, the DoH published its 11th report to Parliament on the Pharmaceutical Price Regulation Scheme (PPRS). The PPRS is the voluntary agreement between the DoH and the pharmaceutical industry which sets the prices of medicines in the UK. The system works by controlling the prices of brand-name drugs by regulating the profits that pharma companies are allowed to make on sales to the NHS. The report on the PPRS by the DoH has been published almost every year in order to assess how the agreement is serving the UK Government and the pharmaceutical industry.

UK has lowest prices and highest rates of generic prescribing
The report confirmed that the UK has some of the lowest medicine prices compared with a wide range of developed countries, both inside and outside Europe, and has significantly lower prices than the US–more than 2.5 times lower. Even when average exchange rates over the last five-year period are taken into account, the UK is still in the bottom third.

There was also acknowledgement of the high use of cheaper, off-patent medicines, with over 80% of medicines in primary care being prescribed as generics. According to the Association of the British Pharmaceutical Industry (ABPI), this equates to amongst the highest rates of generic prescribing in the whole of Europe and confirms that the current PPRS is providing good value for money to the NHS.

However, despite the low prices for drugs in the UK and the high use of generics, which has been estimated will save the NHS over GBP3 billion between 2009 and 2014, patients are still not gaining access to new and innovative drugs in the UK. In fact, an ABPI analysis shows that the use of new cancer medicines in the UK is 33% lower than in the rest of Europe.

Promoting innovation
The results of the DoH report came as good news for the UK pharma industry who are concerned by government plans to switch to a system of ‘value-based pricing’ from the end of 2013. The plans are part of a bid to better promote innovation, where new medicines will be priced according to their expected benefits to patients. The UK pharma industry, however, has expressed doubts as to whether such a system will actually promote the development of new drugs.

According to ABPI, fair and reasonable prices for medicines are absolutely essential for the development of new innovative treatments to address unmet clinical need. Without appropriate reward, companies would be unable to undertake the huge risks required to take a medicine to market, which on average costs over GBP1 billion and 12–15 years to develop.

The increasingly tough environment for drugs is a growing concern for pharmaceutical companies across Europe, causing many to turn to emerging markets for sales opportunities.

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