* Proposed 10-20 pct cuts for drugs in statutory scheme
* Tough signal as industry negotiates voluntary deal
* UK plans “value based pricing” for new drugs from 2014
By Ben Hirschler
LONDON, June 20 (Reuters) - Britain’s Department of Health is aiming to cut some drug prices by between 10 and 20 percent as part of a drive to ensure the state healthcare system gets good value for money.
Governments across Europe have been taking a tough line on medicine costs as stagnant economic growth hits budgets.
The planned UK price cuts would apply to the 10 percent of branded drugs not covered by the voluntary Pharmaceutical Price Regulation Scheme (PPRS) - a long-standing arrangement between government and the drugs industry.
The decision to push for such large cuts in the statutory pharmaceutical pricing scheme, which sets the legal basis for pricing, signals a hard bargaining stance as drugmakers haggle over a deal for the majority of products sold through the PPRS.
A consultation on the price cuts was announced on Thursday as the government set out plans to study the benefits that medicines bring to wider society.
“We cannot simply spend more and more on drugs - this would mean spending less and less elsewhere,” health minister Lord Howe said in a statement.
The country’s healthcare cost agency, the National Institute for Health and Care Excellence (NICE), will study the impact drugs can have on people’s ability to work or contribute to the economy and society.
“A drug that brings a lot of extra benefits may justify the NHS (National Health Service) paying more, but equally the NHS might pay less for a drug that does not deliver wider benefits,” Howe said.
NICE will be responsible for assessing new medicines as part of a novel system of “value-based pricing” that the government plans to bring in from January 2014.
The new system will initially apply only to new branded prescription drugs, since it would not be feasible to carry out a value-based assessment for each medicine already on the market.
The Association of the British Pharmaceutical Industry (ABPI), representing companies including GlaxoSmithKline , AstraZeneca, Pfizer and Novartis , said it believed its medicines already provided good value for the money.
“The price of our medicines are amongst the lowest in Europe ... Compared with our European counterparts, we continue to struggle at getting the latest and most innovative medicines to patients,” ABPI Chief Executive Stephen Whitehead said.