The Government is to impose a £200m a year price cut on generic medicines. Regulations to introduce the cuts (The Health Service Medicines [Control of Prices of Specified Generic Medicines] Regulations 2000, made under the Health Act 1999) were laid before Parliament on July 6 and will come into force on August 3.
Reimbursement to pharmacy contractors at the lower prices will begin in September.
Announcing the move, Lord Hunt of Kings Heath (Parliamentary Under-Secretary of State for Health) said that three major generic manufacturers had said that the cuts would not stop them producing a full range of products in normally prevailing market conditions. This view was supported by the British Generic Manufacturers' Association.
"Prices have fallen a little since April, but nowhere near enough to correct the effect of last year's increases," Lord Hunt said. "If we did not take action, we would have no certainty that prices would fall further."
Lord Hunt also confirmed the Government's decision to abolish the Drug Tariff Category D classification. He said that when products were in short supply and pharmacists and dispensing doctors could not obtain stock below the maximum price, arrangements would be put in place to allow them to be reimbursed for more expensive brands.
He added that the list prices of some products remained excessively high compared to the prices at which they were traded. The Government expected list prices to be brought more closely in line with real prices. Further action would be taken by the Government if this did not happen quickly.