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Tuesday 25th October 2016

Drug companies overcharge NHS

22nd February 2007

The NHS is being charged hundreds of millions of pounds too much by drug companies according to a new report.


The Office of Fair Trading says branded medicines cost the NHS £7bn a year, but is not getting the best price for many of them. It has called for an overhaul of the regulations which govern pricing.

Carried out in 2005, the report concluded many of the drugs prescribed regularly were as much as 10 times more expensive than other treatments considered to be as effective.

These included medicines used to treat cholesterol and hypertension.

The report recommended a system of value-based pricing to encourage the pharmaceutical industry to invest where there are no treatments currently available which would command a higher price.

The findings of the report have been rejected by the pharmaceutical industry which insists the NHS get a good deal, paying less per head of the population than many other European countries.

Drug companies also invest heavily to produce new medicines.

The Association of British Pharmaceutical Industry warned against undervaluing drug companies, who could shift their research and development bases out of the UK.

The report calls for an overhaul of the voluntary Pharmaceutical Price Regulation Scheme (PPRS), which caps profits that each drug company can earn from selling branded drugs to the NHS.

Firms have said that this system, which is set every five years, enables companies to develop their long-term strategy for R&D, which is vital to discover new medicines.

The Department of Health will now consider the report, although it is likely to be welcomed as a way of saving money.

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