UK's value-based pricing could damage pharma R&D - report

07/06/2012

The UK pharma industry has said in a report that the government's proposed value-based pricing scheme for new drugs could damage R&D by rewarding big drug breakthroughs, rather than incremental improvements.

In a Thursday website statement introducing the report, the Association of the British Pharmaceutical Industry (ABPI) chief executive, Stephen Whitehead, warned the approach threatens the future of pharmaceutical research in the UK.

The next round of pricing negotiations are due to begin during the autumn, the ABPI said.

Whitehead said: "The pricing negotiations will decide the future of pharmaceutical research in the UK. If we minimise the reward for innovation in the UK, then our manufacturers will go abroad. Our industry, our economy, and our healthcare system will suffer - UK patients will suffer.

"The government wants to target resources at big breakthroughs, but the science shows us that developments in medicine are made in small steps," Whitehead continued.

Whitehead referred to a report commissioned by the ABPI, called the Many Faces of Innovation, which argues that competition is driven by price reward and that follow-on medicines may often be superior to the first to market.

GROWING RELUCTANCE TO REWARD INNOVATION IN EUROPE

According to the report by the Office of Health Economics (OHE), there is a "growing reluctance" in Europe's health system and beyond to reward innovation by paying higher prices.

The report cites Germany's reference pricing system, which places all medicines considered to be non-innovative in a reference price system, regardless of patent status and adds that Spain only rewards products with an "exceptional" innovation level.

Meanwhile Italy has introduced an innovation algorithm, where consideration of disease severity, availability of other treatments and therapeutic effect are assessed and yield possible therapeutic innovation ratings of important, moderate or modest.

The OHE argues in its report that under these types of policies, many new medicines with valuable improved characteristics are considered no different from generic copies, a disincentive to incremental improvements in existing drugs.

The report warns that in a 2010 consultation document on value-based pricing, the UK government stated it wants to reward "genuine breakthrough" drugs.

However the report argues that this approach will be unfair, given the uncertain nature of pharmaceutical research, because companies will fail or succeed only by launching first-in-class medicines and will not be rewarded for worthwhile and important refinements to existing medicines.

Source: www.apmhealtheurope.com