Regulating the Prices and Costs of Medicines in the United Kingdom

Abstract

Pharmaceutical price and overall cost controls in the UK (which represents 4% of the world medicines market) are aimed at containing NHS medicines spending, while also permitting the development of the research based pharmaceutical industry. The non-statutory Pharmaceutical Price Regulation Scheme (PPRS) allows free pricing of new patented medicines (generic medicine prices are controlled separately). But it limits profits from NHS sales, and the amounts spent on activities such as research and promotion. The ratio of industry R&D to promotion costs incurred within the NHS market is 3:1. Elsewhere in the world more is often spent on promotion than on research. On the demand side the NHS imposes direct and indirect budgetary restraints on prescribers. These have been coupled with positive incentives for economic medicines purchasing and prescribing. Some 80 per cent of all NHS prescriptions are now written generically. The National Institute of Clinical Excellence (NICE) works to clarify and ensure NHS patients' rights to access to medical and other treatments. Britain has arguably been successful in containing domestic medicines spending while permitting research based pharmaceutical companies to prosper, and contribute a £2 billion export surplus. The increasing sophistication of NHS medicines management and the demands of the single European market are in the future likely to lead to a reduced role for the PPRS. However, it will probably be preserved in a modified form after it is renegotiated in 2004/05. © 2003 by The Haworth Press, Inc. All rights reserved.