In the UK, the government negotiates directly with the pill makers, not PBMs

From John Curry, March 1, 2008
Subject: Fw: You see, in the UK the govt. negotiates with the pillmakers!

Why can you get almost any Rx in the UK for about 5 bucks for a prescription? Here's why...the govt. negotiates with the pillmakers and not your friendly local PBM! If the pillmakers weren't making any money on the sale do you think they would offer to sell the drug to the Brits? Of course, here in the U.S., the middlemen inject their profit motive into the mix before you get the final product in your hand. Looks like it's time to negotiate another U.K./pillmaker contract and I'm sure, when all is said and done, that the Brits will still walk away with almost any Rx for far under 10 bucks a pop. Those socialist Brits (tongue in cheek)! Hey....I thought we modeled our government to be similar to theirs! Of course, their legislators aren't bought off like our legislators who are almost daily wined and dined by lobbyists from the pharmaceutical industry, are they?

John

Ministers to scrap medicines price deal

By Andrew Jack
Published: February 28 2008, Financial Times (ft.com)

UK

The government is poised to scrap the pricing mechanism for prescription medicines, setting a deadline of September 1 for the launch of a new deal with drug companies.

In a letter to be sent as soon as Friday, the Department of Health will inform the Association of the British Pharmaceutical Industry, the trade body, that it is giving notice on the mechanism, according to people with knowledge of the plans.

The change, triggered in part by Treasury pressure for spending cuts and a series of recent official reports calling for reforms, comes almost 2½ years before the scheduled end of the complex mechanism, called the pharmaceutical price regulation system.

The notification follows indications last year from Alan Johnson, the health secretary, that he wanted to renegotiate the pharmaceutical price regulation system, and was seeking to achieve a significant proportion of a 3 per cent cut in total departmental spending through a reduction in the £11bn medicines bill.

It also suggests significant progress towards agreement on a new set of terms between the government and the industry.

Under the terms of the existing pharmaceutical price regulation system, negotiated in 2005 and due to last until 2010, either the ABPI or the government must give six months’ notice to the other side.

The industry had opposed the calls for change, arguing that the PPRS provided a degree of long-term predictability and stability in pricing, and that it had already imposed an across-the-board price cut of 7 per cent on all prescription medicines.

Government officials are believed to have called for a 10 per cent price cut again this year in their opening negotiations, while the ABPI has argued that any fresh reduction should be compensated by incentives to re-ward innovation and boost the uptake of new medicines.

A revised mechanism may seek savings through scrapping the inclusion of “branded generics” – prescription medicines which have come off patent and which helped to allow drug companies to minimise the impact of the 7 per cent price cut by reducing prices far more on products with lower margins.

It will need to take into account a recent report from the Office of Fair Trading to introduce a pricing system more closely aligned to new medicines, their value in improving treatment and their cost effectiveness.