Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education

Front Page



UK Politics







Talking Point

In Depth

On Air

Low Graphics

Tuesday, July 13, 1999 Published at 17:42 GMT 18:42 UK


Drug prices slashed

The NHS will save money on some prescription medicines

The £7bn NHS drugs bill could fall sharply after the government struck a deal on prices with the pharmaceutical industry.

The Association of the British Pharmaceutical Industry (ABPI) has agreed to cut the price of branded prescription medicines by 4.5% - a move that could slash £200m a year from the health service bill.

Prescription charges will not be affected by the price cut, but the deal could help to reduce pressure on a health service which is struggling to cope with demand, and may lessen the need to ration some drugs.

In return, drug companies have won concessions and allowances aimed at rewarding and encouraging research and development of new products.

The revised Pharmaceutical Price Regulation Scheme (PPRS) replaces a 1993 agreement and will run from October 1 until 2004.

The agreement follows months of negotiations where it was rumoured that the government was preparing to scrap the PPRS, a voluntary code which allowed drug companies to set their own prices for drugs as long as they did not pass certain profit limits.

The justification for the scheme was that prices took into account the money each company invested in researching a particular drug.

But there were concerns that prices had been rising by 5% a year and that some drug companies were getting around the system by selling on licences and pushing up the cost of certain drugs.

Rewarding innovation

Frank Dobson, the Health Secretary, said: "This new agreement rewards innovation and research, but keeps a tight rein on public expenditure.

[ image: Frank Dobson welcomed the deal]
Frank Dobson welcomed the deal
"We wanted to have a new scheme which allows the research-based pharmaceutical sector to invest and flourish here in Britain.

"That is what we have got. It is good for the NHS, good for the tax-payer, good for the research-based pharmaceutical companies."

Mr Dobson said the savings generated by the 4.5% price cut and by a restriction on price increases for older medicines, would allow the government to reward companies which were successful in developing valuable new medicines. This will include new allowances for research and development costs.

Michael Bailey, president of the ABPI, said: "Industry and government have mutually beneficial interests in ensuring the flow of safe and effective medicines to the NHS at a reasonable price and in maintaining a profitable and innovative industry in the UK.

"The revised agreement is a very positive way to achieve both objectives."

A statement issued by the ABPI said: "Industry has had reluctantly to accept the one-off price cut but it has done so in recognition of the current pressures on NHS funding."

Stop overcharging consumers

But supermarket chain Asda, which has waged a three-year battle against pricing of over-the-counter medicines, called on the drug companies to go further than a simple reduction for NHS prescription medicines.

Asda claims that companies producing branded non-prescription medicines such as headache pills, indigestion tablets and vitamins are overcharging consumers.

An Asda spokesman said: "The issue is when are we going to see a reduction in prices for consumers as well.

"Over-the-counter medicines and self-medication are growing sectors and people are being charged what is in effect a health tax, particularly those with children and the elderly.

"Action on this, which will put money in people's pockets, is long overdue."

Advanced options | Search tips

Back to top | BBC News Home | BBC Homepage | ©

Health Contents

Background Briefings
Medical notes

Relevant Stories

12 Jul 99†|†Health
Contaminated drug fears could cost millions

09 Mar 99†|†Health
Prescription charge evasion targeted

02 Mar 99†|†Health
Independent mediation for NHS drug prices

25 Feb 99†|†Health
Prescription charge up again

20 Jan 99†|†Health
GPs admit to rationing care

07 Jan 99†|†Health
Patients suffer from NHS rationing

17 Nov 98†|†Health
Drugs industry hits back

Internet Links

Association of the British Pharmaceutical Industry

Department of Health

The BBC is not responsible for the content of external internet sites.

In this section

Disability in depth

Spotlight: Bristol inquiry

Antibiotics: A fading wonder

Mental health: An overview

Alternative medicine: A growth industry

The meningitis files

Long-term care: A special report

Aids up close

From cradle to grave

NHS reforms: A guide

NHS Performance 1999

From Special Report
NHS in crisis: Special report

British Medical Association conference '99

Royal College of Nursing conference '99