The Government and the pharmaceutical industry have agreed a deal on the 2009 pharmaceutical price regulation scheme (PPRS) which concerns the pricing of branded drugs in the UK.

The 2009 PPRS will ensure that more patients will benefit from faster access to a wider range of innovative drug treatments at a fair price to the NHS. The following agreements have been made (taken directly from source):

• A cut in the cost of drugs sold to the NHS: a 3.9% price cut will be introduced starting in February 2009.
• A further price cut of 1.9% will be introduced in January 2010;
• Subject to discussion with affected parties, the Department of Health will also introduce generic substitution from January 2010. There would be further price adjustments on January of each year aimed as the proportion of savings from generic substitution varies with time;
• Action to support innovation so patients have faster access to new medicines that are clinically and cost-effective;
• A new non-contractual voluntary scheme providing stability and predictability in Pharmaceutical Pricing for the next 5 years;
• New and more flexible pricing arrangements that will enable drug companies to supply drugs to the NHS at lower initial prices, with the option of higher prices if value is proven at a later date; and
• The more systematic use of patient access schemes by drug companies to allow access to medicines which have not initially been assessed as cost or clinically effective by NICE.

The summary of responses and impact assessment were both published on 24th December 2008; these can be accessed via the links below.  According to the impact assessment, after adjusting for low-cost product exemptions, the savings from the price cut are estimated to be in the region of £245m in primary care in 2009/2010.  Savings from the hospital sector are difficult to forecast, but they are expected to be less significant and they have not been monetised.