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OFT recommends overhaul of PPRS

The Office of Fair Trading (OFT) has completed a review of the Pharmaceutical Price Regulation Scheme (PPRS) and recommended that the scheme be reformed to deliver better value for money for the NHS and to focus research in areas where there would be greatest benefits for patients.

The PPRS scheme is voluntary and is negotiated between the Department of Health and the Association of British Pharmaceutical Industry (ABPI). It allows pharmaceutical companies to set their own prices for branded prescription medicines with constraints placed upon overall profit.

The OFT identified several treatments, including those for cholesterol, blood pressure and stomach acid where current prices do not reflect patient benefits. The OFT therefore recommend replacing the existing scheme with a patient-focussed value based pricing scheme where the price paid is linked to the therapeutic benefits provided to patients by the intervention. The OFT also point out that such schemes are already operational in countries like Australia, Canada and Sweden.

The BBC has reported the findings and in this article Dr Richard Barker, director-general of the ABPI, has defended the current scheme stating that, "as a country we pay less per head for medicine than most major European countries".

The Department of Health must now consider the findings in the OFT report and respond to the recommendations. There is no obligation for the recommendations to be adopted although it is unlikely that the findings will be ignored.

Action: Clinicians should be aware of the OFT report. It provides an indication that branded prescription medicines may be overpriced and therefore using generic alternatives may offer better value for money.