Pharmaceutical companies fear the move heralds a new government crackdown on the cost of medicines as it tries to slash the pounds 3bn-a-year NHS drugs bill.
Companies could learn today how tough the Government plans to be at a meeting of their trade body, the Association of the British Pharmaceutical Industry. The ABPI, after talks with the Department of Health, will report back with proposals for the Pharmaceutical Price Regulation Scheme - the arrangement by which the Government controls the level of profits companies make out of the NHS.
Worries about the proposals were heightened yesterday when the NHS advisory committee on drugs forced RPR to drop the price of its Zimovane sleeping pill from 98p to 16p a tablet. RPR faced the threat of having the drug banned if it failed to accept the lower price. The advisory committee is reviewing the cost of 10 categories of drugs, including oral contraceptives and skin products.
One pharmaceuticals analyst said: 'I'm sceptical of companies' claims that it might have a major impact on profitability, though the arbitrary way the Government can demand price cuts makes it difficult for them to plan and manage.'
Peter Blinman, RPR's UK general manager, said the committee's action could stifle innovation and development, and would make the company think twice about launching similar products in the UK. Zimovane's sales last year were about pounds 10m.
Even at the new price Zimovane is still more expensive than other widely-used sleeping pills, which cost about 3p a pill. Dr Guy Esnouf, an RPR spokesman, said it cost more because it was a superior product with fewer side affects. He agreed that turnover may rise because cost-conscious doctors may be prepared to prescribe the drug more widely.
Meanwhile, a trial that could end Glaxo's monopoly on its hugely profitable ulcer drug, Zantac, began in a North Carolina court yesterday, with a challenger claiming the right to sell the product in the US after 1995. Zantac, based on the chemical ranitidine hydrochloride, is protected by two patents, one of which expires that year, and the other in 2002. But Novopharm, an over-the-counter drug manufacturer with licensing rights to ranitidine in Canada, argues that the second patent is invalid because its assertions are all 'inherent' in the basic patent.
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