Value-Based Pricing: Too High a Price for UK Pharma? - Pharmaceutical Executive

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Value-Based Pricing: Too High a Price for UK Pharma?


Pharmaceutical Executive


Can we agree on definitions?

Stakeholders contacted by Pharm Exec also cautioned that the dire forecasts do not necessarily apply to the principle of value-based pricing. Reforms that establish a closer association between the price of a medicine and the value it presents to society are to be welcomed, and it may be that VBP will offer more latitude for incentivized pricing in outcomes-driven disease areas such as cancer, particularly where there are good diagnostic tools involved.

The fundamental problem for critics of the government's proposals is the confusion as to what "value" actually means. For Schoonveld, VBP, as the DOH is defining it, "does not mean anything." He contends the drug industry has always engaged in value-based pricing where it could—and when it was not restricted by government intervention. In reality, he says, the prospective UK system could be called "Value-Based Price Control."

it's a race—to the bottom

Arguments about definitions notwithstanding, what is indisputable is that the VBP (and other healthcare) proposals are being shaped by the pressures of an economic crisis. As such, changes aimed at establishing a more sustainable healthcare system could be outweighed by measures that are trying to plug holes in public finances. When the UK government's plans for VBP were first drawn up, Walton reminds us, the world was a different place.

The government's consultation document ended with the assertion that its preference would be "to achieve a negotiated agreement on value-based pricing," with the hope that these negotiations "might begin sometime in 2012." But a DH spokesperson threw no more light on this for Pharm Exec, and simply re-iterated that VBP was on course to take effect as originally set out in the proposals. That is just 18 months away, not long for lobbyists to secure the clarification of detail and definition that the industry is looking for. The industry strategy is to get tough behind the scenes, reminding politicians of the "hollowing out" investment consequences of taking the same path as Germany, where introduction of the AMNOG reform legislation (see Pharm Exec, November 2011) has resulted in the predicted lower price increases but at the expense of delays in the launch of medicines with EU approval. If this situation were mirrored in the UK, says ABPI's Paul Catchpole, "it would be a really bad outcome. Nobody benefits—not the patient, not the NHS, nor the industry."


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Source: Pharmaceutical Executive,
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