BMJ  2008;336:251-254 (2 February), doi:10.1136/bmj.39434.500185.25

Analysis

Value based pricing for NHS drugs: an opportunity not to be missed?

¹ Centre for Health Economics, University of York, York, ² Department of Economics and Related Studies, University of York, York, ³ Public Health and Health Policy, University of Glasgow, Glasgow, ⁴ Health Economics Research Group, Brunel University, Middlesex, ⁵ Institute of Health Sciences, University of Leeds, Leeds, ⁶ Department of Health Policy, Management and Evaluation, University of Toronto, Toronto, Canada

The policy debate about price, value, and innovation in pharmaceuticals is at a critical stage for the NHS. Claxton and colleagues describe the key principles of value based pricing and consider some of the concerns about such a scheme

The first 150 words of the full text of this article appear below.

Policy background

The NHS spends about £11bn (15bn, $22bn) annually on pharmaceuticals, of which £8bn is on branded drugs, representing about 13% and 10% respectively of available resources.¹ As growth in NHS funding is expected to slow, access to innovative technologies will depend on savings found elsewhere. The UK Department of Health uses the pharmaceutical price regulation scheme to control expenditure on branded drugs. This 50 year old scheme is intended to control the profits companies can earn through periodic and general price cuts. A report by the Office of Fair Trading recommended reform, basing a drug’s price on its health benefits.^{1 2} The government has confirmed its intention to renegotiate the existing scheme,³ and a recent House of Commons Health Committee report has also welcomed reform.^{4 5} The policy debate about price, value, and innovation is at a critical stage for the NHS.

The principles of value based pricing

Establishing the value of a drug requires an assessment . . . [Full text of this article]

Box 1 Value and the cost effectiveness threshold
Box 2 Price, guidance, and volume

Some concerns

NHS drug spend
Domestic research and development
Incentives for "me too" products
Value of innovation

Some critical issues

Cost effectiveness threshold and subgroups
Price and the need for evidence
Assessment vehicle

Conclusions

Summary points

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