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Having Your Cake and Eating It

Office of Fair Trading Proposal for Funding New Drugs to Benefit Patients and Innovative Companies

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Abstract

There are insufficient resources in the UK to fund all new technologies and new indications approved by the National Institute for Health and Clinical Excellence (NICE). Diverting funding from existing sources will have a detrimental effect on the provision of other priority services. The UK Office of Fair Trading (OFT) recently suggested a value-based pricing approach that appears workable but has generated considerable debate. Their proposal of a 25% premium for the originator product once generics are available is more generous than seen in a number of other European countries, where typically only the lowest priced product is reimbursed. The OFT proposal for a maximum 50% premium for patent-protected products, versus the prices of generics in a class or related classes, is also more generous than the proposed reforms for the pricing of proton pump inhibitors in Sweden or current reforms in Germany.

In our opinion, the OFT proposals are persuasive and in accordance with the reforms seen in other European countries, and therefore should be adopted. The alternatives to fully funding new drugs or new indications as approved by NICE are either tightening the cost per QALY threshold, giving NICE an annual notional budget to fund its advice alongside suggested areas for disinvestment, proactively switching patients from high-cost brand-name drugs to generics, or further delaying funding for new drugs and new indications approved by NICE. The majority of these suggestions are not in the best interests of patients or innovative pharmaceutical companies seeking to reap the rewards of their efforts.

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Notes

  1. The Drug Tariff is the maximum reimbursed price paid to pharmacists for the product, dosage and pack size, excluding the dispensing fee.[14]

  2. The use of trade names is for product identification only and does not imply endorsement.

  3. Drugs grouped by comparable pharmacological and therapeutic activities.

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Acknowledgements

No sources of funding were used to assist in the preparation of this article. The authors have no conflicts of interest that are directly relevant to the content of this article. The authors would like to thank Vittorio Bertele and Andrew Walker for their helpful comments on earlier drafts.

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Authors and Affiliations

  1. Pharmacology Research Institute ‘Mario Negri’, Via La Masa 19, 20156, Milan, Italy

    Brian Godman, Roberta Joppi & Silvio Garattini

  2. Management School, University of Liverpool, Liverpool, UK

    Alan Haycox

  3. Institute of Pharmacology, University of Heidelberg, Heidelberg, Germany

    Ulrich Schwabe

  4. Pharmaceutical Drug Department, Azienda Sanitaria Locale of Verona, Verona, Italy

    Roberta Joppi

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  1. Brian Godman
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  2. Alan Haycox
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  3. Ulrich Schwabe
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  4. Roberta Joppi
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Correspondence to Brian Godman.

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Godman, B., Haycox, A., Schwabe, U. et al. Having Your Cake and Eating It. Pharmacoeconomics 26, 91–98 (2008). https://doi.org/10.2165/00019053-200826020-00001

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