Value based pricing for NHS medicines: magic bullet, counterfeit treatment or the mixture as before?

In February 2007 the Office of Fair Trading (OFT) published a study on the UK’s Pharmaceutical Price Regulation Scheme (PPRS). The latter has in various forms played a role in setting NHS medicine prices since the late 1950s. The OFT’s report concluded that the 2005 version of the PPRS (which sought in the main to regulate pharmaceutical company profits earned from the NHS via calculations taking into account capital investment levels and the research, promotional and managerial costs incurred in relation to the sale of patented medicines in the UK) was ‘outdated, perverse and unfit for purpose’. It concluded that even though the PPRS might need to be retained as a form of ‘reserve regulation’, it ought to be largely replaced by product by product ‘value based pricing’ (VBP).