If it ain't broke, don't price fix it: the OFT and the PPRS.
The Office of Fair Trading (OFT) Report on the UK Pharmaceutical Price Regulation Scheme (PPRS) recommends that when the current five-year PPRS expires in 2010 it be replaced with 'value-based pricing' which involves pre-launch centralised government price setting based on a cost-per-QALY threshold plus periodic ex post reviews. I examine the validity of the OFTs criticisms of the existing PPRS, review its proposals and propose an alternative way forward. I conclude that PPRS has performed well as a procurement bargain between industry and the UK government. It does not, however, incentivise efficient relative prices. That is not its job. I identify a number of problems with the OFT proposals. I recommend that key elements of a reformed UK pharmaceutical environment for 2010 should include an expanded role for HTA but with companies retaining freedom to set prices at launch; HTA use targeted via a contingent value of information approach; a retained backstop PPRS, perhaps moving to an RPI-X type control; the use of risk sharing and non-linear pricing arrangements; measures to ensure more effective therapeutic switching at local level; and measures to improve the take up of cost-effective treatments.
Towse
Adrian
A
Office of Health Economics, London, UK. atowse@ohe.org
D003132:Commerce / Q000191:economics* / Q000331:legislation & jurisprudence; D003365:Costs and Cost Analysis / Q000191:economics* / Q000331:legislation & jurisprudence; D004345:Drug Industry / Q000191:economics* / Q000331:legislation & jurisprudence; D017850:Economics, Pharmaceutical; D033161:Government Regulation; D038622:Internationality; D019057:Quality-Adjusted Life Years; D013673:Technology Assessment, Biomedical; D006113:United Kingdom