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Tuesday, 20 February 2007

NHS drugs pricing report

The OFT today launched its report into the Pharmaceutical Price Regulation Scheme.

The report argues that the scheme is inefficient. Instead of operating a value-based pricing scheme, where the amount the NHS pays is linked to the therapeutic value of the drugs for patients (the OFT’s proposed new model), the current system utilises a control of price controls (29.4 per cent return on capital and floor of 8.4 per cent return on capital for branded goods) and profit controls (companies are free to set initial prices for new active substances, but subsequent increases are restricted).

The IPKat, on taking a quick look through the report, is happy to see that the OFT has acknowledging that patented and generic products will need to be treated differently. However he’s not convinced that patent owners will see prices capped by value to patients as fully reflecting their R & D costs.

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