§ The Parliamentary Under-Secretary of State, Department of Health (Lord Warner)We have today agreed a 7 per cent price reduction for branded prescription medicines with the Association of the British Pharmaceutical Industry (ABPI). The reduction has been agreed as part of a new pharmaceutical price regulation scheme (PPRS) agreement. It will save more8WS than £1.8 billion over the next five years on these medicines. The money will be channelled back into frontline NHS services by local primary care trusts.
The new PPRS agreement will last for five years. Its objectives are to secure the provision of safe and effective medicines for the NHS at reasonable prices; to promote a strong and profitable pharmaceutical industry capable of such sustained research and development expenditure as should lead to the future availability of new and improved medicines; and to encourage the efficient and competitive development and supply of medicines to pharmaceutical markets in this and other countries.
It is important that we continue to encourage the pharmaceutical industry, in its first-class research and development work to deliver new and improved medicines for patients. For that reason, the agreement includes improved incentives for the research and development of new medicines, including those for children.
The PPRS is a voluntary agreement between the ABPI and the four health departments in England, Scotland, Wales and Northern Ireland. It is backed by Section 33 of the Health Act 1999. It allows companies freedom of pricing for new active substances—new medicines when launched on the UK market and sets a target rate of return on capital and allowances for research and development and marketing expenditure. Companies that exceed the level of profit allowed under the scheme are required to repay the excess. Branded pharmaceutical companies that elect not to join the PPRS will be subject to a statutory scheme under Sections 34 to 38 of the Health Act 1999.