The OFT recommendations (PDF link) on reforms to the UK drug pricing scheme will divide the pharmaceutical companies. The OFT’s conclusion that reform would release £500m of expenditure that could be used more effectively will concern many of them, if that £500m were reallocated by the NHS to non-drug treatments and services.
However some will welcome the move to what’s called a "value-based" scheme. Put simply, that would relate much more closely what the NHS pays for drugs to the revealed benefits for patients. Schemes of this sort already exist in Sweden, Australia and Canada.
In some cases, that would lead to drug companies receiving higher prices for particularly effective drugs - and would be seen by them as a strong incentive to researching new treatments, because they would have the confidence that they would be properly rewarded for those treatments.
So the OFT doesn’t believe that the UK’s world-leading position in pharmaceuticals would be put at risk by the introduction of this new purchasing system. It ought, in fact, to reward British companies like GlaxoSmithKline or AstraZeneca which set great store by their prowess in developing effective new medicines.
However the OFT’s shocking conclusion - and the one which some drug companies will contest - is that the NHS is paying up to ten times too much for certain medicines as measured by what could be paid for near identical medicines.
The competition watchdog highlights treatments for cholesterol, blood pressure and stomach acid as areas were some drug prices are ludicrously inflated.
The OFT’s most striking statement is that the current pricing system, called the Pharmaceutical Price Regulation Scheme, doesn’t ensure that “the price of medicines reflect the health benefits they bring to patients”.
It’s hard to think of a more savage indictment of the NHS.
Here’s why I’m persuaded the time for reform is probably nigh. Other countries around the world use the NHS’s pricing system as a benchmark for what they pay for drugs. But in many cases, they view the NHS prices as the maximum - and they use them as a basis for negotiating a discount.
This is not to argue that the current system is utterly hopeless. But one of its flaws is that probably relies excessively on GPs to be acutely aware of the different costs to the NHS of near-identical treatments and to prescribe the cheapest.
The OFT found that all sorts of other factors influence GP’s prescribing behaviour. So why put the onus on GPs to prescribe the cheapest drugs? It’s not what they are trained to do or instinctively drawn to do.
Surely it would be better to ensure that all the drugs available to GPs are priced at a level that property reflects their therapeutic efficacy.