Pharmaceutical giant declared: pricing decision will threaten investment




Recently, a British government decision on drug pricing by pharmaceutical companies provoked a protest voice. They claim the move will force pharmaceutical companies to reduce the size of its business in the UK.


May 19, the British Ministry of Health issued a notice to terminate an agreement with pharmaceutical companies. The agreement allows part of the pharmaceutical companies to compensate by raising drug prices, an agreement on the termination in 2007, suffered losses. Association of British Pharmaceutical Industry (ABPI) is not only against the Ministry of Health, terminated "pharmaceutical pricing regulation scheme (PPRS)" decision, but also how to achieve the Department's refusal to disclose relevant information to the decision many criticized the move.

Novartis and Pfizer is the world's two largest pharmaceutical company.
Both announced that they will reduce this year's business in the UK. British Prime Minister in January this year David Cameron, said he urged pharmaceutical companies responsible individuals should continue to invest in the UK, said it is providing tax credits to these projects. Association of British Pharmaceutical Industry pointed out that the Ministry of Health's decision undermines the efforts of Prime Minister Cameron. Currently, the British government is planning to replace the existing 54-year-old drug pricing system.

"In order to achieve the goal to benefit patients, any plan should uphold the principle of good faith and fair, it is very important." Located in London on the case comments via e-mail. "PPRS interruption caused by instability in the financial investment environment is not conducive to British stability and predictability, while in the previous, these factors on the global capital investment in the UK pharmaceutical industry has played a positive role."

15 billion U.S. dollars of brand-name drugs expenditure

British state-run National Health Service (NHS) in each of the brand drugs cost about 90 billion pounds (about 15 billion U.S. dollars), since 1957, it has been to use its purchasing power in accordance with the "medicine price regulation plan" and the pharmaceutical industry a series of agreements to negotiate. According to regulations, in each of the duration of the agreement, each drug manufacturers must adjust their drug prices so as to achieve a specific objective of the overall discount; if pharmaceutical manufacturers could not meet this requirement, then you must pay the difference.

In 2007, the British government to terminate an agreement entered into force in 2005. After that, a number of pharmaceutical companies about the discount beyond the prescribed level of 7%, while others below that level. Therefore the Government and the ABPI in 2009, reached an agreement, as long as the discount is not enough for companies to return excess profits to 75%, will allow those who terminated the 2007 agreement led to loss-making companies through price increases to compensate for the loss.

75% of the pharmaceutical companies failed to meet the target, which led the Government to make the May 19 decision, the British Ministry of Health made the remarks in an e-mail.

New drug pricing system

UK Department of Health said: "To solve the 2005 PPRS discount drug prices caused by too much or too little of the problem, relevant aspects of the consultations have been carried out in detail. In 2009, the PPRS has no room for adjustment compensation for pharmaceutical companies, because we has not received 75% discount off the profits of small businesses to return.

In the ABPI PPRS negotiations on behalf of its members, each pharmaceutical companies have with the government on an agreement on the price of drugs, respectively. In some cases, the need to submit annual sales reports. Because these agreements are confidential, and different companies, discount too much or too little situation can not be known to the public.

According to the British Ministry of Health, published on the website information, drug pricing agreement in 2009, a total of more than 150 companies, including Pfizer, Novartis and GlaxoSmithKline (UK's largest pharmaceutical company) and other pharmaceutical giants.

"We are committed to ensuring that the UK is a world leader in drug development for pharmaceutical companies to provide a stable investment environment," the Ministry of Health, said in an email. "This is also great respect for the government in 2009 because of the provisions of PRRS."

New drug pricing system being negotiated among the pharmaceutical industry plans entered into force in 2014. Some features of this system is to limit overall government spending. June 7, 2010, the Cameron a few weeks after the ruling coalition government, the Ministry of Health held a meeting with the ABPI, the pharmaceutical industry representatives told the Minister of Health, a new pharmaceutical drug pricing system will be lower than expected.

UK Department of Health in December 2010 issued a new draft request for proposals pricing system. Which indicated that the new drugs will set a base price to reflect these drugs reduce the hospitalization rate and the effect of NHS expenditure. In March 2011, ABPI on the draft proposals submitted, they think, "between the government and industry, measures to maintain the integrity and coherence of the consultation process is central," old and new pricing system which allows a smooth transition.
2011-06-13