UK government announces new pricing plans

The UK government has announced a new deal with the pharmaceutical industry which will bring in a flexible pricing scheme. Although the announcement relates to the Pharmaceutical Price Regulation Scheme (PPRS), which in turn deals with the branded industry rather than generics, the news is of interest because the agreement further enshrines the place of generics in the NHS' spending plans. Of particular interest is the agreement covering pricing. In the original deal between government and industry announced in June 2008, a saving of 5% in the cost of drugs sold to the NHS was included, which was to be made up of a base price cut for all branded drugs of 2%, combined with measures to reduce the price of out of patent drugs where a generic exists and a further variable price cut. This has now been changed to include a 3.9% price cut and a plan for the Department of Health to introduce generic substitution, whereby pharmacists will be able to dispense a generic against a prescription for a branded drug unless the physician has specified the branded drug to be used. However, the measure will not be introduced before January 2010, a year after the rest of the agreement comes into force, because of the discussions and system changes that would be required. Further price adjustments will then come in each year with the aim of reaching the original 5% cut envisaged. However, the precise effect of generic substitution is unknown, and expected savings have been based on models, and so it is expected that a cut of exactly 5% is unlikely to be achieved; further discussions will therefore be undertaken to keep the scheme on track.

The agreement has been reached with the Association of the British Pharmaceutical Industry (ABPI), and on the face of it represents something of a change of heart for the organisation. Generic substitution - prescribing a generic without the specific consent of a doctor - has been illegal in the UK, and if a doctor has prescribed by a brand name, then the brand version must be dispensed. Not surprisingly, this is a stance that has been defended by the ABPI, which has previously argued that generic substitution would undermine doctors‟ relationships with their patients and could compromise patient health by disrupting the choice of medication selected by the doctor. Whilst the validity of such claims are clearly part of a much wider debate between generics and branded drugs, the stance will nonetheless have been very handy for the ABPI, given that prescribing of generics in Britain has been far higher than in other EU countries, and amongst the highest in the world, and is a trend that has continued to rise. As a result, the ABPI agreeing to at least discuss generic substitution would seem to be a significant change. However, on the other side of the coin, because over 80% of prescriptions are already written generically, it is questionable how much the branded industry would really stand to lose, as the rate suggests doctors already write generic prescriptions unless they specifically want a branded drug used.


Ian Platts - Editor, World Generic Markets