Pharmaceutical Price Regulation effectiveness

The price of drugs sold to the NHS is controlled indirectly by the DHSS through the Pharmaceutical Price Regulation Scheme (PPRS) which began in 1957. The scheme has been revised several times and requires that companies present details of costs, sales, exports, capital investment and estimates of future sales and profits. Rather than regulate the price of each individual product, the scheme aims to limit overall the return on capital which a company makes on its business with the NHS. The scheme works mainly by negotiation between the companies and the DHSS but the Secretary of State for Health can if necessary fix prices by order. For example, in 1983 the minister enforced a 2 % cut across the board. Moreover, limitations have been placed on the amount of money to be spent on promotion. It has been reduced to 10% of the sales for 1984 and 9% for 1985. Companies can in effect be fined under the PPRS for exceeding the limits on promotion. 

In this section we analyse the effects of price regulation and control systems in pharmaceutical markets on levels of consumption, the level and evolution of prices and levels of expenditure. 

The government stated that, when fully implemented, it expected the SEP regulations to reduce the prices of medicines by 40-70%. In line with the regulations, effective 2 August 2004 and for a year thereafter, the price of medicines would not be higher than 50% of the Blue Book manufacturer net price. The Blue Book was a well-known industry publication that supplied the pharmaceutical industry and health care sector with independent and accurate price lists. The government held that the manufacturer net price listed in the Blue Book was inflated to... 

Co-payment is an instrument that should not be used on its own. Neither efficiency in drag use nor equity nor the control of pharmaceutical expenditure can rest solely on co-payment. Its effectiveness is reinforced when it is combined with other instruments and incentives. In fact, all European countries combine, in different doses and proportions, multiple instruments that influence the behaviour of the industry, prescribes and patients. It is sufficient to recall that pharmaceutical expenditure is the product of price by quantity, and to consider the enormous international variability of drag prices,35 in order to understand the limitations of co-payment regulation in comparison with other policies that influence prices. Policies aimed at price control can be as effective as co-payment - or more so - for purposes of cost containment. 

One of the classical topics of pharmaceutical economics, the price elasticity of demand when there is co-payment or shared financing between the insurer and the user, is addressed by Cruz-Roche20 with some calculations on this elasticity. The same topic is developed by Puig-Junoy,21 applied to the Spanish case. This study includes a review of the international literature with empirical content, a detailed description of co-payment in Spain, its regulation since 1978, the main data and estimates of the effect of the switching of prescriptions from the employed to pensioners, and the price elasticity of demand (which is found to be small). 

The US pharmaceutical market remains the dominant world market for manufacturers, representing over 40% of the global market (13). A trtajor attraction for pharmaceutical companies has been the reluctance of the US government to directly intervene in the market. Although other forces have the effect of regulating prices, pharmaceutical comparries are able to charge higher prices in the US than they can in the other key markets of Europe and Japan. 

Xenon (Xe) represents an innovation in the field of anaesthesia. Its narcotic effect was discovered only in 1951. Clinical studies proved the principle applicability even as mono-anaesthetic. The marketing of xenon as finished pharmaceutical requires authorization according to the current drug law regulations. The high price for xenon can be reduced by its recycling from exhaled gas. In order to enable the substitution of all anaesthetics by xenon, considerable increases in capacity of air separation plants would be required. 

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