UK OFT pricing proposal - a necessity to fund new drugs or new indications
There continues to be insufficient resources to fund all new
technologies and new indications approved by NICE despite government
directives and a large increase in NHS funding leading to variable
implementation[1,2,3]. This can also have a detrimental effect on funding
other services with Primary Care Trusts (PCTs) required to remain within
budget[4].
The Office of Fair Trading (OFT) recent suggestion of a value-based
pricing approach in the UK[5] has caused considerable debate[6,7]. We
believe it is workable building on reforms in other European countries to
release valuable resources. The OFT proposal of a 25% premium for brand
products once generics are available is more generous than other European
countries. In France, Italy, Poland, and Sweden for instance patients have
to pay the difference if they wish a more expensive brand[8,9,10]. In
Austria, brand prices must be similar to the generic once the third one is
available for continued reimbursement[8]. The proposal is similar though
to the differential that exists for generic and brand prices in
Germany[11].
The OFT has also proposed a maximum 50% premium for patent protected
products versus the prices of generics in a class or related classes to
encourage choice. This has similarities with pricing calculations in
Italy[9] and more generous than reimbursed brand prices in Germany in
reference classes[11]. In Sweden there will be a maximum 25% premium over
generic prices for existing patent protected products in classes unless
good reason[12,13]. The alternative would be keeping brand prices the same
but instigating proportional rebates. This is because the UK is a
reference country for prices in the EU[5] and rebates are well accepted in
return for higher prices in EU countries.
Consequently, the OFT proposal is persuasive and in accordance with
other European reforms so should be workable in the UK. The alternatives
would be either to tighten the cost/QALY threshold[14], give NICE an
annual notional budget to fund its advice alongside suggested areas for
disinvestment[14], proactively switch patients from high cost brand drugs
to generics[15], or further delay acceptance and funding by Primary Care
Trusts (PCTs) for new drugs or indications approved by NICE as they strive
to provide a range of services.
These alternatives would not be in the best interests of patients
with NICE already saying no to new cancer drugs and PCTs having
difficulties funding for instance HERCEPTIN in early breast cancer[4,16].
Switching patients will require considerable effort as prescribing is
complex, GPs still obtain their information from the industry[17], and
there is limited awareness of drug prices[5]. Additional delays and/ or
possibly tougher approval criteria are also not in the best interests of
innovative pharmaceutical companies seeking to reap the rewards of their
efforts.
1. Audit Commission Health National Report. Managing the financial
implications of NICE guidance September 2005. Audit Commission
Publications, PO Box 99, Wetherby LS23 75A
2. Walley T, Mrazwek M, Mossialos E. Regulating pharmaceutical
markets: Improving efficiency and controlling costs in the UK. Int J
Health Plann Mgmt 2005; 20: 375 - 398
3. Cullum N, Dawson D, Lankshear A, et al. The evaluation of the
dissemination, implementation and impact of NICE guidance – final report.
April 2004 NICE website (www.nice.org.uk) accessed January 2007
4. Wells J and Cheong-Leen C. NICE appraisals should be everyone’s
business. BMJ 2007; 334:936-938
5. Office of Fair Trading (UK). The Pharmaceutical Price regulation
System – An OFT study. February 2007 – www.oft.gov.uk (sourced 6 March)
6. Major S. NHS pays £500mn too much for prescription drugs. BMJ
2007;334: 383
7. Collier J. The Pharmaceutical Price Regulation Scheme. BMJ 2007;
334: 435-36
8. Simoens S, De Coster S. Sustaining Generic Markets in Europe.
Research Centre for Pharmaceutical Care and Pharmaco-economics 2006 (email www.egagenerics.com)
9. Rocchi F, Addis A, Martini N, et al. Current national initiatives
about drug policies and cost control in Europe: the Italy example. J
Ambulatory Care Manage 2004; 27 (2): 127 – 131
10. Andersson K, Sonesson C, Petzold M, et al. What are the obstacles
to generic substitution? An assessment of the behaviour of prescribers,
patients and pharmacies during the first year of generic substitution in
Sweden. Pharmacoepidemiol Drug Saf. 2005 May;14(5):341-8
11. Busse R, Schreyoögg J, Henke KD. Regulation of pharmaceutical
markets in Germany; improving efficiency and controlling expenditures? Int
J Health Plann Mgmt 2005;20:329-349
12. Working guidelines for the pharmaceutical reimbursement review.
Reference 1023/2003 June 2006 – LFN website – www.lfn.se
13. Wessling A, Lundin D. The review of drugs against disease caused
by acid stomach – a summary. LFN website – www.lfn.se
14. Maynard A, Bloor K, Freemantle N. Challenges for the National
Institute for Clinical Excellence. BMJ 2004;329: 227-229
16. Barrett A, Roques T, Small M, and Smith R. How much will
Herceptin really cost? BMJ 2006;333;1118-1120
17. Prosser H, Almond S, Walley T. Influences on GPs’ decision to
prescribe new drugs – the importance of who says what. Family Practice
2003; 20 (1): 61-68
Competing interests:
None declared
Competing interests:
No competing interests
09 May 2007
Brian Barr Godman
Visiting Researh Scientist Mario Negri and Visiting Research Fellow University of Liverpool
Alan Haycox, Vittorio Bertele', and Ulrich Schwabe
University of Liverpool, L69 7ZH and Mario Negri Pharmacology Research Institute, Milan, Italy
Rapid Response:
UK OFT pricing proposal - a necessity to fund new drugs or new indications
There continues to be insufficient resources to fund all new
technologies and new indications approved by NICE despite government
directives and a large increase in NHS funding leading to variable
implementation[1,2,3]. This can also have a detrimental effect on funding
other services with Primary Care Trusts (PCTs) required to remain within
budget[4].
The Office of Fair Trading (OFT) recent suggestion of a value-based
pricing approach in the UK[5] has caused considerable debate[6,7]. We
believe it is workable building on reforms in other European countries to
release valuable resources. The OFT proposal of a 25% premium for brand
products once generics are available is more generous than other European
countries. In France, Italy, Poland, and Sweden for instance patients have
to pay the difference if they wish a more expensive brand[8,9,10]. In
Austria, brand prices must be similar to the generic once the third one is
available for continued reimbursement[8]. The proposal is similar though
to the differential that exists for generic and brand prices in
Germany[11].
The OFT has also proposed a maximum 50% premium for patent protected
products versus the prices of generics in a class or related classes to
encourage choice. This has similarities with pricing calculations in
Italy[9] and more generous than reimbursed brand prices in Germany in
reference classes[11]. In Sweden there will be a maximum 25% premium over
generic prices for existing patent protected products in classes unless
good reason[12,13]. The alternative would be keeping brand prices the same
but instigating proportional rebates. This is because the UK is a
reference country for prices in the EU[5] and rebates are well accepted in
return for higher prices in EU countries.
Consequently, the OFT proposal is persuasive and in accordance with
other European reforms so should be workable in the UK. The alternatives
would be either to tighten the cost/QALY threshold[14], give NICE an
annual notional budget to fund its advice alongside suggested areas for
disinvestment[14], proactively switch patients from high cost brand drugs
to generics[15], or further delay acceptance and funding by Primary Care
Trusts (PCTs) for new drugs or indications approved by NICE as they strive
to provide a range of services.
These alternatives would not be in the best interests of patients
with NICE already saying no to new cancer drugs and PCTs having
difficulties funding for instance HERCEPTIN in early breast cancer[4,16].
Switching patients will require considerable effort as prescribing is
complex, GPs still obtain their information from the industry[17], and
there is limited awareness of drug prices[5]. Additional delays and/ or
possibly tougher approval criteria are also not in the best interests of
innovative pharmaceutical companies seeking to reap the rewards of their
efforts.
Email addresses for correspondence: Godman@marionegri.it;
ahay@liv.ac.uk
References
1. Audit Commission Health National Report. Managing the financial
implications of NICE guidance September 2005. Audit Commission
Publications, PO Box 99, Wetherby LS23 75A
2. Walley T, Mrazwek M, Mossialos E. Regulating pharmaceutical
markets: Improving efficiency and controlling costs in the UK. Int J
Health Plann Mgmt 2005; 20: 375 - 398
3. Cullum N, Dawson D, Lankshear A, et al. The evaluation of the
dissemination, implementation and impact of NICE guidance – final report.
April 2004 NICE website (www.nice.org.uk) accessed January 2007
4. Wells J and Cheong-Leen C. NICE appraisals should be everyone’s
business. BMJ 2007; 334:936-938
5. Office of Fair Trading (UK). The Pharmaceutical Price regulation
System – An OFT study. February 2007 – www.oft.gov.uk (sourced 6 March)
6. Major S. NHS pays £500mn too much for prescription drugs. BMJ
2007;334: 383
7. Collier J. The Pharmaceutical Price Regulation Scheme. BMJ 2007;
334: 435-36
8. Simoens S, De Coster S. Sustaining Generic Markets in Europe.
Research Centre for Pharmaceutical Care and Pharmaco-economics 2006 (email
www.egagenerics.com)
9. Rocchi F, Addis A, Martini N, et al. Current national initiatives
about drug policies and cost control in Europe: the Italy example. J
Ambulatory Care Manage 2004; 27 (2): 127 – 131
10. Andersson K, Sonesson C, Petzold M, et al. What are the obstacles
to generic substitution? An assessment of the behaviour of prescribers,
patients and pharmacies during the first year of generic substitution in
Sweden. Pharmacoepidemiol Drug Saf. 2005 May;14(5):341-8
11. Busse R, Schreyoögg J, Henke KD. Regulation of pharmaceutical
markets in Germany; improving efficiency and controlling expenditures? Int
J Health Plann Mgmt 2005;20:329-349
12. Working guidelines for the pharmaceutical reimbursement review.
Reference 1023/2003 June 2006 – LFN website – www.lfn.se
13. Wessling A, Lundin D. The review of drugs against disease caused
by acid stomach – a summary. LFN website – www.lfn.se
14. Maynard A, Bloor K, Freemantle N. Challenges for the National
Institute for Clinical Excellence. BMJ 2004;329: 227-229
15. Moon JC, Bogle RG. Switching statins. BMJ 2006; 332:1344-1345
16. Barrett A, Roques T, Small M, and Smith R. How much will
Herceptin really cost? BMJ 2006;333;1118-1120
17. Prosser H, Almond S, Walley T. Influences on GPs’ decision to
prescribe new drugs – the importance of who says what. Family Practice
2003; 20 (1): 61-68
Competing interests:
None declared
Competing interests: No competing interests