Feature / The price is right

Changes to the PPRS should lead not only to faster access to new medicines for patients, but also greater clinical and cost effectiveness, explains Jennifer Field

In January the Department of Health and the Association of the British Pharmaceutical Industry (ABPI) agreed a new pharmaceutical price regulation scheme (PPRS). The two main changes of interest to finance staff are flexible pricing and patient access schemes. The scheme also includes new mechanisms to encourage uptake of medicines.

The PPRS is the mechanism that indirectly controls the price of branded prescription medicines supplied to the NHS as it regulates the profits companies can make on sales. The new scheme delivers a 3.9% price cut starting in February 2009 and a further 1.9% price cut the following year.

Flexible pricing

In the past the price set at a drug’s launch remained its price, unless a percentage cut was agreed. The UK price is used as a marker of prices agreed by other countries. This created an incentive to have a high market entry price, to be lowered later if profit levels were higher than acceptable.

In the new scheme companies can propose an initial launch price and are free to propose an increase (maximum 30%), which can be invoked if further evidence of effectiveness or use in new clinical indications changes the value the medicine provides.

Flexible pricing will only apply when medicines are appraised by the National Institute for Health and Clinical Excellence (NICE). NICE will conduct a review to determine whether the revised price provides value to the NHS. It will not negotiate or set prices, but appraise the proposed price.

Patient access schemes

For patient access schemes, an agreement is reached between the Department of Health and a pharmaceutical company to improve the cost effectiveness of a drug and give patients access to innovative medicines (see table). The schemes abide by the following principles:

• Respect for NICE’s independent assessment and appraisal of the evidence.
• Schemes are to be discussed first and agreed in principle by the Department and the company; NICE will assess the potential impact on cost effectiveness.
• The full costs to the NHS of any such arrangements should be included in the costs considered by the appraisal committee.
• Schemes should be clinically robust, clinically plausible, appropriate and allow monitoring.
• Any scheme should be operationally manageable for the NHS without unduly complex monitoring, disproportionate additional costs and bureaucracy. Consideration will also be given to the cumulative administrative burden of schemes.
• Schemes should be consistent with financial flows in the NHS and local commissioning.
• The NHS in England and Wales must be consulted on patient access schemes, in particular if they involve extra data collection beyond the usual purchase of medicines.

The Department and NICE are also conscious of the need to make timely decisions on new medicines to limit the potential to delay appraisals. Companies should propose schemes at the outset or at the end of the appraisal process, once any appeals have been heard and NICE has issued final guidance to the NHS. It is hoped patients will have faster access to  cost-effective medicines as a result of the PPRS changes.

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