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Government report shows low UK medicine prices

Last Updated: 2012-02-23 16:15:37 -0400 (Reuters Health)

By Ben Hirschler

LONDON (Reuters) - Britain, which is planning a radical overhaul of its medicine pricing system from 2014, already has some of the lowest prices in Europe, according to a government report on Thursday.

The findings were seized on by pharmaceutical companies as evidence that existing voluntary price-control measures were working well and that the state-run National Health Service (NHS) was getting good value for money.

Health minister Andrew Lansley, however, sees room for improvement. From the end of 2013, he aims to switch to a new system of "value-based pricing" -- a concept that has so far been only sketchily defined.

The Association of the British Pharmaceutical Industry (ABPI) is due to start detailed talks on how the system will work in late summer 2012.

Drug prices are under growing pressure across Europe as governments tackle ballooning budget deficits and firms fear the British changes might lead to direct price controls or further obstacles to launching new therapies.

The current Pharmaceutical Price Regulation Scheme (PPRS), which companies would be happy to retain, controls the prices of branded drugs by regulating profits they are allowed to make on sales to the NHS.

In its latest report to parliament, the Department of Health confirmed that the PPRS was, by and large, doing its job.

In particular, British medicine prices in 2010 were found to be lower than those in any of 10 other comparator European countries. U.S. prices were on average more than 2-1/2 times more expensive.

The picture was slightly different, however, when average exchange rates over the last five years were used. On this basis, prices were still significantly lower than in the United States and also lower than in Australia, Austria, Belgium, Germany, Ireland and Sweden, but not as cheap as in Finland, Spain and France.

Despite low prices, British drugmakers, including GlaxoSmithKline and AstraZeneca, argue that patients still struggle to access new medicines, with use of new cancer drugs 33 percent lower than in the rest of Europe.

The increasingly tough environment for drugs is a growing concern for pharmaceutical companies across Europe, some of which have started to relegate the region when it comes to developing new medicines.

Ratings agency Standard & Poor's said in a report on Wednesday that harsher conditions at home also meant Europe's big pharmaceutical firms had been faster to tap into new emerging markets than their U.S. peers.