In a long-awaited report the OFT said the purchasing system – the Pharmaceutical Price Regulation Scheme (PPRS) – should be reformed to give better value for money from NHS drug spend.
The NHS spends some £7 billion annually on buying branded prescription medicines.
The OFT’s study identifies a number of drugs where prices are ‘significantly out of line with patient benefits’.
These include treatments for cholesterol, blood pressure and stomach acid.
Some drugs currently prescribed in large volumes are up to ten times more expensive than substitute treatments that deliver very similar benefits to patients, the watchdog said.
The study recommends that the current pricing scheme, where companies are free to set their own prices within very broad profit constraints, is replaced with a ‘patient-focussed value based pricing scheme’ in which the prices the NHS pays reflect the benefits they bring to patients.
The OFT estimates that the move would release about £500 million which could be used more effectively, giving patients better access to medicines and other treatments which they may currently be denied.
Value-based pricing would also give companies stronger incentives to invest in drugs for those medical conditions where there is greatest need, the watchdog said.
John Fingleton, OFT Chief Executive, said: ‘This report provides a comprehensive assessment of the PPRS and identifies a number of areas where the scheme could be improved.
‘Focussing prices on the needs of patients rather than on the costs of drug companies would be good for both patients and for business.
‘It would allow more patients better access to more effective treatments and it would focus drug company innovation and investment on the areas where patients need it the most, creating more valuable drugs in the future.’
The Department of Trade and Industry and the Department of Health now have 120 days to consider and respond to the OFT’s findings and recommendations.
Commenting on the OFT report, the pharmaceutical industry claimed the NHS medicines bill was growing due increasing consumption not price.
Nigel Brooksby, President of the Association of the British Pharmaceutical Industry, said: ‘The price of medicines in real terms has declined by 21 per cent in the last 10 years.’
He insisted the industry was ‘not being rash’ or irresponsible with the cost of medicines.
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