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Medicine prices will be cut by 7 percent under a new five-year deal between the government and drug makers that will save more than 1.8 billion pounds on the nation's drugs bill
The move is a further sign of the mounting pressure on pharmaceutical prices around the world as healthcare providers strive to rein in runaway costs. The price reduction for branded prescription medicines was announced by the Department of Health on Wednesday, confirming recent speculation that a substantial cut was imminent. The price deal represents the central plank of a new Pharmaceutical Price Regulation Scheme between the department and the Association of the British Pharmaceutical Industry, which represents major companies. The rolling PPRS arrangement regulates prices of branded drugs and the profits manufacturers are allowed to make on sales to the state health service. The last two agreements resulted in price cuts of 4.5 percent and 2.5 percent respectively, informs Reuters. According to Bloomberg, drugmakers agreed to reduce by 7 percent the prices they charge for branded prescription medicines in the U.K., which will save the government more than $3.3 billion over five years. The reductions, negotiated with the Association of the British Pharmaceutical Industry, will save the U.K.'s National Health Service 370 million pounds ($682 million) annually through 2009, the U.K. Department of Health said in a statement. The NHS spends about 11 billion pounds on medicines each year. Governments are pressuring the pharmaceutical industry to cut prices as rising health-care costs strain budgets. The ABPI, representing about 80 companies, including GlaxoSmithKline Plc and AstraZeneca Plc, the U.K.'s biggest drugmakers, opposed the price cuts but accepted the agreement because it provides a long- term plan and financial incentives, spokesman Ben Hayes said. ``It is not something we happily signed up to,'' Hayes said in an interview. ``But in terms of more general benefits we now have a five-year deal with the government. It provides stability, which is a key ingredient for the industry.'' The U.K. government is targeting a goal of 21.5 billion pounds in spending cuts by fiscal 2008 and plans to use the savings to fund ``frontline NHS services,'' the Department of Health said in the statement. In return for price cuts, pharmaceutical companies will escape tax on 28% of NHS sales if they put the money back into research and development in Britain, compared with 23% in the previous five-year agreement. There will also be financial incentives for innovative medicines, including treatments for children. Mr Reid is expected to say that the deal shows how the NHS can use its position as a bulk purchaser to get better terms for taxpayers and patients. The compromise came amid criticism of the profits of pharmaceutical giants. It is likely to be scrutinised by MPs on the Commons health committee, which is investigating the influence of the industry, to establish whether Mr Reid has done better than previous health secretaries in restraining drug profits, publishes the Guardian Unlimited. The deal came after nine months of negotiation between the government and the Association of the British Pharmaceutical Industry (ABPI).
Print Medicine prices will be cut by 7 percent under a new five-year deal between the government and drug makers that will save more than 1.8 billion pounds on the nation's drugs bill Bookmark Medicine prices will be cut by 7 percent under a new five-year deal between the government and drug makers that will save more than 1.8 billion pounds on the nation's drugs bill

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