NHS too quick to make savings.
The Office of Fair Trading has today released their five yearly review of the Pharmaceutical Price Regulation Scheme (PPRS). The currently system is one whereby drugs firms may set their own prices within general profit guidelines as negotiated during each review.
The conclusions of the 2007 report indicate that the NHS is purchasing some medications at costs far outweighing the benefits to service users. The key suggestion by the OFT is to transform the current PPRS into “a patient-focused value based pricing scheme, in which the prices the NHS pays for medicines reflects the therapeutic benefits they bring to patients”.
Of the estimated £8 billion spent on pharmaceuticals each financial year by the NHS alone, the OFT state that up to half a billion pounds are being squandered on overpriced branded medicines.
This is certainly not a laughable amount, particularly with health services striving to cut costs and increase operational efficiencies across the board. But is it really beneficial in the long run for the government to intervene further into the pricing of such products, and restructure them in a manner more financially advantageous for the NHS?
At first it may appear that the cost savings would be greatly beneficial to both the public health services and the service user. The freeing up of £500 million a year would allow more treatments to become available in hospitals through redirected expenditures.
The report, for example, highlights how some drugs currently prescribed in large volumes are up to 10 times more expensive than substitute treatments that deliver very similar benefits to patients. These same drugs are further noted to be among those most commonly used and prescribed by the NHS in the form of treatments for high cholesterol, blood pressure and stomach acid. It stands to reason therefore that the drug companies, in conjunction with the price of medication falling 21 per cent in real terms over the past decade, can stand to make cuts from their profits. The OFT certainly think so and to an extent I agree.
For the most part I actually side, as I do of late to increasing degrees, with the right-wing conservative thinkers. Forcing the hand of pharmaceutical companies through legislative means can coerce them into pushing for new innovative development and production practices in order to cut their own costs whilst furthering the production. However, it may also act as the incentive they need to reallocate their base of operations outside of the UK, one of the largest scientific hubs of the European Union (exporting £7 billion per year).
The impact to the economy would be large and the ramifications felt far and wide. As such it is in the interests of the government to help lower the price paid by public services for medications, whilst also encouraging the corporations to remain within the UK.
It should certainly be noted that whilst fair prices will indeed give value for money to the taxpayer, the high prices of research and development incurred by the pharmaceutical industry should not be forgotten. Cutting their profits, if not carried out in a diplomatic and prudent manner, may stand to limit their ability to reinvest in new medical technologies and innovations for the future. As such, whilst the savings may appear enticing today, we may find future generations in an even more deprived state.
The current PPRS runs from 2005 to 2010, and allows drug companies to make returns on capital of between 8.4 per cent and 29.4 per cent in supplying branded products to the NHS.
I am happy for private companies such as GlaxoSmithKline to make the profits that they do on the proviso that a sensible amount is reinvested. Furthermore, I feel that, should the Department of Health take the report under advisement, special dispensation need to be specified for public health departments. On an international scale the same needs to be agreed upon for impoverished nations also.
To a large extent these high prices are a necessary evil that we need to tame rather than eradicate.
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3 Responses to “NHS too quick to make savings.”
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Spot on.
Such as I am with my efforts to abolish the international space program.
Why you little…. %*!@$!