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

Abstract

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.