Branded medicines pricing: statutory scheme: impact assessment

Document type
Impact Assessment
Corporate author(s)
Great Britain. Department of Health
Publisher
Department of Health
Date of publication
21 January 2015
Series
IA No.: 5192
Subject(s)
Health Services
Collection
Social welfare
Material type
Reports

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The market for branded prescription medicines is not a conventional market since manufacturers hold patents that provide temporary monopoly supplies of their products. The Government therefore cannot rely on external market forces and must take action to manage the prices of medicines.

The Pharmaceutical Price Regulation Scheme (PPRS) is a voluntary agreement with an agreed limit on growth of the branded medicines bill. In the PPRS companies make payments to the Department on any growth exceeding the agreed limit. Companies choosing not to enter the PPRS are subject to a Statutory Scheme, which provides a direct limit on the maximum price. In order for the whole branded medicines pricing system to operate in a fair and consistent way, the Department needs to ensure that the voluntary and statutory schemes are broadly equivalent and achieve the same level of savings. The Department consulted on proposals for a further adjustment to the maximum price and on strengthening the information provisions in the statutory scheme.

This document assesses the impact of two options:

  • Do nothing: in which case drug spending may exceed the levels intended in the PPRS agreement, imposing excessive costs on the health service and depriving patients of treatments and services which would improve their health.
  • Adjust the cut in maximum price specified by the Statutory Scheme, such that its effect broadly mirrors the level of spend projected in the PPRS agreement, and avoids the imposition of excessive costs on the health service, while also strengthening the information requirements of scheme to allow the Department to enforce the provisions in fair and consistent way.

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