Freeze on drug prices will save NHS £1bn over next two years

Money-saving deal goes through despite opposition from pharmaceutical companies

Health Reporter

The NHS is set to save more than £1bn over the next two years thanks to a deal struck with drug companies to freeze the amount the health service spends on the most expensive drugs.

Branded medicines cost the health service £12bn last year and price rises have seen costs rise by five per cent annually, putting huge demands on stretched NHS budgets.

But under a new five-year deal, which has been staunchly opposed by some drug companies, NHS spending on patented medicines will remain flat for two years, followed by small increases of just under two per cent over the following three years – with drug companies paying back any costs above this level.

The Government hailed the deal as a “breakthrough” which would increase the availability of the best medicines without incurring out-of-control costs to the taxpayer.

But pharmaceutical companies said the move would scare away investment in British medicines research, leading to patients “missing out” on the latest treatments.

The deal, which was negotiated by the Department of Health on behalf of the national health services in England, Scotland, Wales and Northern Ireland, applies to branded medicines – those which are patented to one company and therefore usually the most expensive.

A Department of Health spokesperson said that all money paid back by drug companies would be divided between the four national health services. 

Popular drugs such as GlaxoSmithKline’s asthma treatments Ventolin and Seretide, and Roche’s cancer drug Mabthera, will be covered by the deal.

The agreement comes after many months of negotiating, described by the Association of the British Pharmaceutical Industry (ABPI) as the “most complex” ever held with the British government. It follows crackdowns in other countries on the spiralling costs of drugs, which governments fear are crippling recession-hit healthcare systems.

However, despite agreeing to the payment freeze, the ABPI said that negotiations had been “built on a myth that medicines are expensive in the UK”, arguing that prices were among the lowest in Europe.

The deal is voluntary and drug companies that do not sign up will be hit with a statutory 15 per cent price cut on their medicines. The statutory scheme will impact around 10 per cent of branded medicines used in the UK.

Drug company Pfizer claimed the deal was “damaging… for all those concerned, but most notably for UK patients.”

“This Government price cut alongside the on-going issues in assessing medicines for NHS use sends a clear message that innovation is not truly valued or supported. Whilst the UK Government wants new medicines to be researched and developed here, it is not prepared to pay for the life changing and life-saving medicines that result from this investment. In today’s competitive global economy such a stance sends the wrong signal for potential future decisions,” the company said in a statement.

The health secretary Jeremy Hunt said: “This agreement ensures NHS patients will receive the best and most advanced medicines in the world while managing the cost.

“UK pharmaceutical companies have responded to the challenges we face as a country, both in terms of the increased demand for medicines and pressure on public spending. I hope in return we have given them the certainty and backing they need to flourish as a sector both here and in the global market.”

Life and Style
A teenager boy wakes up.
life
Life and Style
It is believed that historically rising rates of alcohol consumption have contributed to the increase
food + drink
Life and Style
fashionEveryone, apparently
Voices
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
PROMOTED VIDEO
Life and Style
ebooksA superb mix of recipes serving up the freshest of local produce in a delicious range of styles
Life and Style
ebooksFrom the lifespan of a slug to the distance to the Sun: answers to 500 questions from readers
Arts and Entertainment
Critics say Kipling showed loathing for India's primitive villagers in The Jungle Book
filmChristopher Walken, Bill Murray, Scarlett Johanssen Idris Elba, Andy Serkis, Benedict Cumberbatch, Cate Blanchett and Christian Bale
Life and Style
Playing to win: for Tanith Carey, pictured with Lily, right, and Clio, even simple games had to have an educational purpose
lifeTanith Carey explains what made her take her foot off the gas
Arts and Entertainment
The White Sails Hospital and Spa is to be built in the new Tunisia Economic City.
architectureRussian billionaire designs boat-shaped hospital for new Dubai-style Tunisia Economic City
Arts and Entertainment
You could be in the Glastonbury crowd next summer if you follow our tips for bagging tickets this week
music
Sport
Husain Abdullah returns an interception off Tom Brady for a touchdown
nflLeague has rules against 'sliding to ground on knees'
Life and Style
tech
Extras
indybest
Life and Style
food + drink
News
i100
News
i100
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
Arts and Entertainment
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating
    and  

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    iJobs Job Widget
    iJobs General

    KS1 Teacher

    £21500 - £31500 per day: Randstad Education Chelmsford: Would you like to work...

    Java Developer - web services, XML and API

    £330 - £350 Per Day: Clearwater People Solutions Ltd: Our client based in Lond...

    Maths Teacher

    Negotiable: Randstad Education Reading: Maths Teacher required to teach Furthe...

    Primary teachers required for schools in Norwich

    £21000 - £35000 per annum: Randstad Education Cambridge: Primary teachers requ...

    Day In a Page

    Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

    Isis an hour away from Baghdad -

    and with no sign of Iraq army being able to make a successful counter-attack
    Turner Prize 2014 is frustratingly timid

    Turner Prize 2014 is frustratingly timid

    The exhibition nods to rich and potentially brilliant ideas, but steps back
    Last chance to see: Half the world’s animals have disappeared over the last 40 years

    Last chance to see...

    The Earth’s animal wildlife population has halved in 40 years
    So here's why teenagers are always grumpy - and it's not what you think

    Truth behind teens' grumpiness

    Early school hours mess with their biological clocks
    Why can no one stop hackers putting celebrities' private photos online?

    Hacked photos: the third wave

    Why can no one stop hackers putting celebrities' private photos online?
    Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

    Homegrown ballerina is on the rise

    Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
    Education, eduction, education? Our growing fascination with what really goes on in school

    Education, education, education

    TV documentaries filmed in classrooms are now a genre in their own right
    It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

    It’s perfectly reasonable to negotiate with villains like Isis

    So why don’t we do it and save some lives?
    This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

    Is a sub-2-hour race now within sight?

    Dennis Kimetto breaks marathon record
    We shall not be moved, say Stratford's single parents fighting eviction

    Inside the E15 'occupation'

    We shall not be moved, say Stratford single parents
    Air strikes alone will fail to stop Isis

    Air strikes alone will fail to stop Isis

    Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
    Nadhim Zahawi: From a refugee on welfare to the heart of No 10

    Nadhim Zahawi: From a refugee on welfare to the heart of No 10

    The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
    Witches: A history of misogyny

    Witches: A history of misogyny

    The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
    Shona Rhimes interview: Meet the most powerful woman in US television

    Meet the most powerful woman in US television

    Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
    'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

    Endangered communities photographed 'like Kate Moss'

    Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style