A clearer picture of the UK government’s plans for value based pricing of drugs has emerged from a consultation paper published this week.

The new system, to be introduced at the beginning of 2014, aims to price drugs according to the value they deliver to patients. It will apply only to new branded drugs, not to generics or drugs already on the market, and will provide a series of maximum prices that depend on the burden of illness treated, the wider social impacts of a new treatment, and whether the product breaks new ground.

The basic price (confusingly called a “threshold” in the paper) of all new drugs will be calculated on the basis of other services that will be displaced elsewhere in the NHS if the new treatment is to be paid for—but the paper does not specify how costs will be compared. It does …