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Consultation on Value-Based Pricing (Government Response)

Volume 531: debated on Monday 18 July 2011

I am publishing today “A new value-based approach to the pricing of branded medicine—the Government’s response”.

The consultation document set out this Government’s proposals for introducing a system of value-based pricing for medicines, as stated in the coalition agreement. The system will enable patients to access the medicines and treatments their doctor advises they need by establishing a closer link between the price of a new branded medicine and the value which it offers in terms of benefits to patients, reflecting unmet need, therapeutic innovation, and benefit to society.

We have committed to honouring the terms of the pharmaceutical price regulation scheme 2009 until its expiry, but there is a need to reform the way in which we pay for medicines from 2014 onwards. The current system of pricing medicines does not promote innovation or patient access in the way that we are looking for. As we have made clear through the establishment of the cancer drugs fund prior to 2014, we are enabling NHS clinicians to have better access to the medicines required for their patients.

A total of 188 consultation responses were submitted by a wide-range of organisations and individuals. The Government’s response to the consultation provides a summary of the responses received. There was broad support for the concept of a value-based pricing system for new medicines, and for the objectives set out in the consultation document. Many responses welcomed the broader approach proposed for the assessment of new medicines’ value, while also acknowledging the complexity involved in carrying out such assessments.

The Government’s response confirms our intention to introduce value-based pricing in 2014. We want the arrangements that we put in place from 2014 to ensure that NHS patients have consistently good access to effective, clinically appropriate medicines, wherever they live. The current funding direction requiring NHS commissioners in England to fund drugs and treatments in line with the National Institute for Health and Clinical Excellence’s recommendations is designed to achieve this, and it is one of our key objectives for value-based pricing.

The response highlights our intention, set out in the Government’s response to the Future Forum report, to maintain the effect of the funding direction in the value-based pricing arrangements, to ensure that the NHS in England consistently funds medicines with a value-based price. The NHS will be required to fund drugs already recommended by NICE, as well as drug treatments subject to the value-based pricing regime. This means patients will continue to have the legal right to clinically appropriate, cost-effective drugs and treatments as set out in the NHS constitution and accompanying handbook.

The response confirms that, in relation to the scope of value-based pricing and the key elements of the value-based pricing assessment, we intend to pursue an approach in line with the proposals set out in the consultation document. The response also acknowledges that significant work remains to develop the value-based pricing system, in particular, as regards how to measure and assess the value of new medicines.

The response emphasises that we want our work to be informed by the best available evidence, and that we look forward to continued positive and productive engagement with the full range of interested stakeholders as our work progresses.

The consultation provided an important opportunity for different groups to contribute their views on our proposed approach, to inform key principles at the heart of value-based pricing and to signal their interest in engaging with further work to design and implement the new system.

We are grateful to all those who responded, and believe that the Government response to the consultation represents an important next step in the process of developing a new system that is stable and sustainable for both the NHS and industry, and delivers improved outcomes for patients through better access to effective medicines.

A copy of the Government response to the consultation has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.