Drug pricing scheme under OFT scrutiny |
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Wed, 14 Sep 2005 20:05
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LONDON: Britain’s competition watchdog - the Office of Fair Trading (OFT) said it would investigate into the drug pricing arrangement between the pharmaceutical industry and the government to see if it is fair to patients.
This would be the first fundamental review of the Pharmaceutical Price Regulation Scheme (PPRS) in almost fifty years. The Department of Health (DoH) and the industry negotiate the pricing of branded products according to the rules in the PPRS.
Chairman, Sir John Vickers said OFT would study the scheme to weed out flaws and ensure that the industry was meeting the needs of patients with safe and effective medicines and value for money. It would also see whether the rewards and incentives, offered to pharma companies to develop new and useful drugs, were adequate or not.
Currently, the drug market in the UK is dominated by top five pharma companies who hold 77 percent market share. The OFT would also examine whether any pharma multinational was enjoying a larger share of the UK market.
The PPRS was created in 1957 and is regarded by most multinationals as a legacy of state centralization efforts. US-based pharma companies suggest that it be scrapped. On the other hand, British companies vote in favour of the scheme saying it sets prices for five years which allows for forward planning. Also, the government is obliged into considering research and development and other costs at the time of pricing.
An OFT official said the investigation was not in response to any complaint. The pharma industry’s representative Richard barker, director-general of the Association of the British Pharmaceutical Industry, said his organisation would cooperate fully.
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