UK's pharmaceutical profit control scheme to be reviewed

The agreement between the UK government and the pharmaceutical industry which controls company profits is to be reviewed.

Introduced in 1999, the Pharmaceutical Price Regulation Scheme (PPRS) covers all branded medicines and allows manufacturers to set their own prices in return for controls over the total profits they can make.

The scheme reaches the end of its five year period in September 2004, which the Government have now pre-empted with a new consultation on how it should or should not change.

The consultation asks stakeholders to consider four choices:

• The continuation of the 1999 agreement without change
• Options for possible changes to the agreement
• The potential for deregulation
• Alternative proposals which can be put forward by individuals and organisations

The industry has already signalled that it wants the scheme to continue, arguing that free pricing allows competition to flourish, allowing market forces to ensure medicines are good value for money.

Dr Trevor Jones, Director General of the ABPI said: "We have found the current PPRS has balanced the need for NHS prudence with the industry's success in developing new medicines and the UK's science base, and encouraging local and inward investment to the UK by ABPI member companies."

The ABPI signed the agreement with the Government in 1999 and said that it had to accept 'reluctantly' a 4.5% price cut on medicines as part of the deal.

The Association said at the time that the price cut meant that NHS medicines cost 7% less than in 1993, and 10% less in real terms than ten years previously.

The European Commission recently put forward a new strategy for improving the Europe's pharma industry competitiveness, which included proposals to allow free pricing across the EU.