PPRS investigated by OFT

01-Sep-2005  |  Martin Baker

The Office of Fair Trading has launched a market study into the Pharmaceutical Price Regulation Scheme.

The Office of Fair Trading has launched a market study into the Pharmaceutical Price Regulation Scheme. www.oft.gov.uk/News/Press+releases/2005/171-05.htm

This study follows on from an OFT report last year in which the OFT found that the pharmaceutical sector was a market where there were reasonable indications of competition problems.

A particular focus of the study will be to examine whether the PPRS works well to ensure pharmaceutical markets meet the needs of patients by offering adequate rewards to pharmaceutical companies for developing new and useful drugs, while providing the tax payer with value for money.

The market study will last until Spring 2006 and may continue longer depending on the findings.  There are a number of possible outcomes of the study including a reference to the Competition Commission for a more in-depth investigation, enforcement action by the OFT or recommendations to the Government to consider changes to the scheme.

This study has far reaching implications.  To date PPRS has held a balance between competing interests within the industry.  If companies perceived as providing more useful drugs are encouraged through higher prices this may result in a two-tier market.  The OFT is stepping into a minefield of assessing therapeutic benefit and potential patient detriment.

Martin Baker

Taylor Wessing London

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