News / Revised PPRS to save millions on drugs bill

The Department of Health and drugs manufacturers have agreed a deal that could save the NHS hundreds of millions of pounds.

Companies that sign up to the revised pharmaceutical price regulation scheme (PPRS) will reduce by 5% the cost of drugs sold to the NHS. It is believed the NHS across the UK could save between £300m and £400m under the deal. The PPRS, which controls prices and caps the  profit companies can earn by selling to the NHS, is the main lever to control health service spending on branded drugs.

The savings, which will be introduced in January 2009, will be delivered by a 2% price cut on branded drugs with a reduction in the price of out-of-patent branded medicines where generic equivalents exist. In addition, there will be a price freeze on 31 August.

Agreement on a new PPRS has not been reached, but the details announced in June will form a significant part of the final deal. The new arrangements also include a provision for a 'windfall tax'. If the actual rate of growth in the drugs bill in primary and secondary care in England exceeds 6.7% in 2008 or 2009 compared with the previous year, there would be a further, one-off 2% cut in 2010 or 2011.

As with the current PPRS, companies would be free to set the price of new products and to modulate prices. Health secretary Alan Johnson welcomed the deal. 'We have a duty to ensure that patients continue to benefit from innovative products at a reasonable price and the taxpayer gets value for money,' he said.

He added that from September manufacturers that did not sign up to the revised PPRS could find the price of their branded medicines controlled by statute.

The renegotiation of the deal was sparked by a critical Office of Fair Trading report last year, which said the NHS could save £500m a year with a value-based pricing system - where the price would vary according to a drug's therapeutic benefit. This has not been included in the latest announcement.

The OFT was disappointed at this but added: 'We are encouraged that further action, beyond negotiating a PPRS price cut, is being considered to ensure that access to medicines reflects their value to patients.'