UK hints at end to drug price controls

The British government said it might be possible to relax or abolish price and profit controls on branded prescription medicines in the UK.

American-style deregulation of the pharmaceutical industry has long been opposed because of fears that the price of drugs would soar. But the Department of Health has now issued a consultation paper that asks the industry whether it wants to keep the existing pharmaceutical price regulation scheme (PPRS), amend it, or "explore the potential for deregulation".

The PPRS indirectly controls the prices of medicines by regulating the profits that companies can make on sales to the National Health Service. The scheme, which also limits promotional spending, is renegotiated every few years by the department and the industry.

Announcing the review, Health Minister Lord Warner said: "We expect to open negotiations with the pharmaceutical industry on a replacement for the current PPRS agreement towards the end of this year."

He said the government would take account of the need to ensure "a reliable supply of branded medicines to the NHS at reasonable prices and the importance of a competitive and successful pharmaceutical industry to the UK economy."

The consultation paper said that a joint government-industry study had examined the extent of competition in the supply of medicines.

"It may be possible for the government to progressively relax the price and profit controls provided by the PPRS or abolish them altogether provided that it could be reasonably certain that the NHS would be able to procure medicines at fair and reasonable prices within a deregulated market."

Richard Ley, a spokesman for the Association of the British Pharmaceutical Industry, the industry trade body, welcomed the review but said it was too early to say whether it would back deregulation, as it had not yet consulted its member companies.

The issue has caused splits in the past, with large American companies like Merck backing deregulation and other companies with large research facilities in Britain opposing it.

The consultation paper says the PPRS had provided a stable regulatory environment for the industry, stable prices for the NHS, and allowed doctors and patients a wide choice of medicines.

But disadvantages included rising prices because of the strength of sterling, the difficulty of identifying company capital costs and the fact that some companies "continue to be reticent" in providing the information they are meant to.