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Deal to boost low cost generic drugs

19th November 2008

A ground-breaking deal has been struck between the drugs industry and the government which could save the NHS up to £550m a year.

Drugs & Money

At the heart of the deal is a flexible pricing scheme which will mean new drugs can be initially introduced at a lower price.

If the treatment proves effect, there is scope for that price to rise in a scheme which could increase opportunities for the NHS and drug companies to share the cost of innovative treatments.

At present, drug companies set the price for a new medicine when it is launched, with limited opportunity to change that afterwards. The new arrangement could now mean medicine prices can go up or down.

Health secretary Alan Johnson said: "A more flexible approach to pricing is in everyone's interest.

"It gets clinically and cost effective drugs to more patients - providing cheaper options where clinically appropriate - delivers value for money for the NHS and the tax payer, and creates a better market for the pharmaceutical industry while supporting research and innovation."

The NHS spent £10.6bn, or 12.7% of its total budget, on drugs in 2006/07, though the Office of Fair Trading has since reported that the NHS spent £500m a year on overpriced medicines.

It is the first time that a pricing agreement between the NHS and drugs industry has not been based on pure finance.

ABPI director general Dr Richard Barker said: "This landmark deal marks a turning point for patients, the NHS and the pharmaceutical industry."

 

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