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Pricing & Reimbursement of Medicines in the United Kingdom

Urch Publishing
June 1, 2005
73 Pages - SKU: URC1279009

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Countries covered: United Kingdom

National pharmaceutical pricing and reimbursement is a complex and ever-changing area. In a rapidly evolving market it is essential that executives are briefed on the regulatory systems that determine the way in which your company operates and sells its products.

The Pricing & Reimbursement of Medicines in the United Kingdom - Understanding the pharmaceutical market in the healthcare system is a straightforward guide to the pricing and reimbursement mechanisms in the UK market, in particular the Pharmaceutical Price Regulation Scheme (PPRS) that came into force in January 2005.

The 70 page report clearly explains the structure of the healthcare system and the regulations and arrangements in place that provide the framework for setting medicine prices and gaining reimbursement through the state financed national health service (NHS). Attention is paid to the mechanisms that restrict spend on pharmaceuticals, including the role of the National Institute for Clinical Evidence (NICE) in England and its equivalent in Scotland. Finally, key current or forthcoming events that may affect the environment are identified and explained. Latest market figures are provided where possible.

As the National Health Service (NHS) reimburses the majority of drugs sold in the UK, the UK has developed an unusual system of controlling pharmaceutical companies' profits through a 'voluntary' agreement, known as the PPRS, between the Government and the Association of the British Pharmaceutical Industry (ABPI). Although some patients pay a small co-payment, the health service is free at the point of contact and most patients are protected from the true cost of medicines. However, a series of cost-control measures on the demand side, including the use of government bodies (The National Institute of Clinical Excellence, NICE; and the Health Technology Board for Scotland, HTBS), to assess clinical-effectiveness and cost-effectiveness, makes the UK one of the most controlled environments in Europe.

Additional Information

Reasons to read this report:

Save time by concisely explaining the key elements of pricing and reimbursement regulation in the UK
Understand the principles of the Pharmaceutical Price Regulation Scheme (PPRS)
Gain insight into latest policies and the political environment affecting the reimbursement of medicines
Learn common jargon and terminology used in the UK healthcare system

Summary
Healthcare System Structure: The NHS; The NHS in England; Primary Care in England; PCT Prescribing Budgets: ‘The Drugs Bill’; Local Pharmaceutical Services (LPS) in England; Secondary Care (Hospitals) in the UK; The NHS in Scotland; The NHS in Wales; LHBs; The NHS in Northern Ireland; Classification and Supply of Medicines in the UK; Nurse Prescribers in the UK; Pharmacist Prescribers (Supplementary Prescribing) in the UK
The Pharmaceutical Market?: Data for England; Data for England and Wales; Data for Wales; Data for Scotland; Data for Northern Ireland; Pharmaceuticals and Tax
The Pharmaceutical Price Regulation Scheme (PPRS): Annual Financial Returns (AFRs); Allocation of Costs and Capital; Limitation of Costs and Assets; Company Profit Cap; R&D Allowance; Marketing Allowance; Information Allowance; New Product Pricing; Products Sold On; Transfer Prices; Other Provisions; Arbitration
Prices Changes for Pharmaceuticals
Pharmaceutical Reimbursement: Dispensing Doctors; Personal Administration GP Claims; Local Supply or National FP10 Routes; Prescribing Information; The PSNC; Contractors in Scotland
Hospital Sales
OTC Price Regulation: Abolition of Resale Price Maintenance (RPM) in May 2001; Size of the UK OTC Medicines Market; Restrictions Removed on Advertising OTC Products; Reclassification (Switching); Online Directory of OTC Products
Control of Pharmaceutical Expenditure: The PCA System; The Indicative Prescribing Scheme (IPS); Economic Evaluation; The NICE; The HTBS; The SMC; Recent NICE Guidance and Decisions; Recent NICE Citizens Council Report; The Limited List (‘Blacklisted’ Products), and ‘The Grey List’; Patient Co-Payment; What is the Effect of Generic Drugs?; The Drug Tariff; Maximum Price Scheme and Generics; Future Transfer of ‘Standard’ Branded Generics to the New Payment Arrangements for Generic Medicines; NHS Legal Action Against Anti-Competitive Price-Fixing
Pharmaceutical Wholesaling: Wholesale Margins
Pharmacy Finance and Margins: Control of Entry Restrictions Revised; New Community Pharmacy Contract; Payments for PCTs; Formula for Future Years; Funding for the New Essential Services; Global Sum Payments; Practice Payments; Protected Payments; Practice Payments; Exit Payments; LPS; ESPS Pharmacies
Impact of Parallel Imports
Future Developments: A UK General Election in 2005: Re-Election of the Labour Government, and a Subsequent Decrease in the Share of the NHS Budget for Medicines; The UK Government Cabinet Office May Review The NHS Drug Tariff, NHS Medicine Procurement, Generic Medicine Substitution, and the Control of Entry Regulations, in 2005; Primary Care Trusts (PCTs) in England Will Receive £135bn in 2006/07 and 2007/08; Increased Involvement of the European Commission and the European Parliament in the Pharmaceutical Industry and Healthcare Policy; and the Introduction of a Possible Single European Price; The Possibility of the EU Allowing Pharmaceutical Companies to Set Prices for Medicines Ineligible for Government-Controlled Pricing and Reimbursement; The Impact of the Accession of 10 New EU Member States in May 2004; Further Cost Containment: Cheaper Branded and Generic Drugs, and More Parallel Imports; GlaxoSmithKline (GSK) Will Increase the Cost to Pharmacies of its Best-Selling Medicines from 1 April 2005, by Removing the 12% Discount it Gives on Drugs Where it Still Holds a Patent; Pricing Reforms for Reimbursed Generic Medicines: Simplification of Drug Tariff Rules; More POM to OTC P Medicine, and OTC P to OTC GSL Reclassifications (‘Switches’); More Prescribing by Nurse Prescribers and Supplementary Pharmacist Prescribers; The New Community Pharmacy Contract Effective From April 2005; Electronic Transmission of Prescriptions (ETP) will Begin in Early 2005; Merger of the PPA into a new NHS Business Services Authority in October 2005; The Application of VAT to Personally Administered Drugs and Appliances (in the Course of Treatment) is currently Under Appeal
Useful Contacts
Abbreviations used
About Urch Publishing
List of Figures: Figure 1 PPA System for Calculation of Reimbursements and Remuneration to Dispensers of Drugs in England; Figure 2 Reimbursement of Items on an FP10 Prescription Form
List of Tables: Table 1 NHS Expenditure on Medicines per Person in the UK; Table 2 Definitions of Prescribing Costs; Table 3 PPA Payments to Contractors; Table 4 Example of Timing of Reimbursement by PPA to Pharmacists; Table 5 The UK Drug Tariff for Generic Medicines; Table 6 Funding for the New Community Pharmacy Contract in England for 2005/6; Table 7 Funding for the New Community Pharmacy Contract in England 2005/6; Table 8 Annual Establishment Payments to Contractors in the Community Pharmacy Contract for 2005/06; Table 9 Practice Payments to Pharmacies Dispensing at Least 1,100 Items per Month in the Community Pharmacy Contract for 2005/06; Table 10 Summary of Pharmaceutical Cost-Containment Measures in the UK

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Pricing & Reimbursement of Medicines in the United Kingdom

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