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If it ain't broke, don't price fix it: the OFT and the PPRS
Authors
Acemoglu
Adelphi Consulting
+41 more
Averch
Bloom
Buxton
Cave
Claxton
Cockburn
Cooksey
Culyer
Danzon
Department of Health
Department of Health and the Association of the British Pharmaceutical Industry
DiMasi
DiMasi
DotEcon
Edwards
Finkelstein
Garrison
Grabowski
Griffin
Keyworth
Kind
LFN (Pharmaceutical Benefits Board)
Lichtenberg
Murphy
Myers
NAO Report
NERA
Office of Fair Trading
Office of Fair Trading
OHE Consulting
Pammolli
Philipson
Ryan
Ryan
Shliefer
Silcock
Towse
Towse
Vickers
Wertheimer
Wren-Lewis
Publication date
1 January 2007
Publisher
Doi
Cite
Abstract
The Office of Fair Trading (OFT) Report on the UK Pharmaceutical Price Regulation Scheme (PPRS) recommends that when the current five-year PPRS expires in 2010 it be replaced with 'value-based pricing' which involves pre-launch centralised government price setting based on a cost-per-QALY threshold plus periodic ex post reviews. I examine the validity of the OFTs criticisms of the existing PPRS, review its proposals and propose an alternative way forward. I conclude that PPRS has performed well as a procurement bargain between industry and the UK government. It does not, however, incentivise efficient relative prices. That is not its job. I identify a number of problems with the OFT proposals. I recommend that key elements of a reformed UK pharmaceutical environment for 2010 should include an expanded role for HTA but with companies retaining freedom to set prices at launch; HTA use targeted via a contingent value of information approach; a retained backstop PPRS, perhaps moving to an RPI-X type control; the use of risk sharing and non-linear pricing arrangements; measures to ensure more effective therapeutic switching at local level; and measures to improve the take up of cost-effective treatments. Copyright © 2007 John Wiley & Sons, Ltd.
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