Health department launches discussion on the PPRS
The Pharmaceutical Price Regulation Scheme has been opened up for discussion by the Government before it starts negotiations with the Association of the British Pharmaceutical Industry on a replacement.
The PPRS is a non-statutory scheme, agreed between the Government and
the ABPI, which indirectly controls the prices of branded prescription
medicines to the National Health Service by regulating the profits that
companies can make on sales to the NHS. The current scheme has been in
force since 1999 and expires in September 2004. The PPRS has existed
in various forms since 1957.
The Government is seeking views on whether the current scheme should
continue unchanged, what the options for change are, what is the potential
for deregulation and any alternative proposals that individuals or organisations
might make.
Under the current scheme, all products on the market on 1 October 1999
had their prices cut by 4.5 per cent. Manufacturers can set any price
for new products with new active ingredients, but subsequent increases
require Government approval. Companies are set a maximum return on capital
employed (ROCE) with an allowance for research and development (R&D)
costs. Companies with a low capital base are set a maximum return on
sales (ROS). If companies fail to achieve this return, that is their
problem, but any profits above the maximum have to be returned to the
Government.
In a discussion document, the Department of Health asks whether there
are any possible alternatives to ROCE and ROS as a basis for the PPRS.
It also wants views on R&D allowances, possible alternatives to the
current system for handling transfer pricing between company divisions
and allowances for the cost of sales promotions.
The document also suggests that the PPRS could be relaxed, or even abolished,
if the NHS can be sure of paying fair and reasonable prices in a deregulated
market.
The discussion paper is available on the DoH website.
Comments can be sent to
Natacha Deschamps
Medicines Pricing and Supply
Branch
Room 138A, Richmond House
79 Whitehall, London SW1A 2NS
e-mail
Natacha.Deschamps@doh.gsi.gov.uk
E-mails should be titled “PPRS
discussion”. |
