Pricing of medicines, in the UK and beyond

View this post in Welsh | Darllenwch yr erthygl yma yn Gymraeg

Scotland’s recent announcement of a new £21m ‘orphan medicines’ fund for rare conditions, similar to the Cancer Drugs Fund which already exists in England, has led to renewed calls by patient groups for more innovative new drugs to be available to Welsh patients.

A major factor in whether or not particular medicines are made available to NHS patients is their cost. The National Institute for Health and Clinical Excellence (NICE) and the All Wales Medicines Strategy Group have a significant role in examining the cost-effectiveness of new medicines; the liver cancer drug Nexavar for example – which comes with a price tag of over £3000 per month – was rejected by NICE as not cost-effective, therefore the NHS will not routinely fund it.

The World Health Organisation states that access to medicines requires the right mix of health policies, intellectual property rules and trade policy settings. In India, Nexavar is available to patients, and at a vastly lower price. Although Nexavar is still under patent, under a controversial ‘compulsory licensing’ ruling the Indian Government has allowed another drug company to produce a generic version of the drug in order to ensure affordable access to the treatment for its citizens.

Not surprisingly, Nexavar’s manufacturer has fought this decision. The pharmaceutical industry relies heavily on exclusive patent rights in order to recoup the investment made in research and development. According to the Association of the Pharmaceutical Industry, it takes over 12 years to develop a drug to the required standards of quality, efficacy and safety, with typical research and development costs of £1.15 billion before a new medicine can be licensed for use.

Up to now, prices of branded medicines in the UK have been controlled via the Pharmaceutical Price Regulation Scheme, which has sought to achieve a balance between reasonable prices for the NHS and a fair return for the industry. In 2010, the UK Government announced plans for a new UK-wide ‘value-based’ pricing system for medicines, which aims to reward innovation and improve NHS patients’ access to effective new drugs. The previous Welsh Minister for Health and Social Services, Lesley Griffiths, stated that Welsh Government officials were working with the Department of Health on the introduction of value-based pricing.

The Health Committee in Westminster has been highly critical of the delay in setting out precisely what a value-based pricing system for drugs entails. The Cancer Drugs Fund in England and the Scottish rare conditions fund were intended as interim measures until value-based pricing comes in at the beginning of 2014, and there remains significant concern about what the new pricing system will mean for the availability of new drugs throughout the UK.


Article written by Philippa Watkins, National Assembly for Wales Research Service