40648 - Drugs: Prices (Answered)

Keith Vaz
To ask the Secretary of State for Health, what measures are in place to regulate the prices of everyday drugs sold to the NHS by pharmaceutical companies.

George Freeman

There are arrangements in place to ensure that the prices paid by the National Health Service for medicines provide value for money for the NHS. The prices and the profits made on the sales of branded medicines to the NHS are controlled by the voluntary Pharmaceutical Price Regulation Scheme. If a company chooses not to join the voluntary scheme, it falls under a statutory scheme which controls the prices of branded medicines.

The Department does not control the price of generic medicines; instead it relies on competition to drive down prices. A report in 2010 by the National Audit Office showed that the reimbursement arrangements had delivered savings for the NHS of £1.8 billion between 2005/6 and 2008/09.

Concerns about possible anti-competitive behaviour by pharmaceutical companies are investigated by the Competition and Markets Authority (CMA). The Department and the CMA work closely together on such matters. The CMA is committed to investigating suspected infringements of competition law, including suspected excessive pricing in the pharmaceutical sector. The CMA has strong powers of investigation and, where it finds that a firm has breached competition law, it may impose penalties of up to 10% of a company’s worldwide turnover.

The CMA has been asked by the Secretary of State to undertake further work to look into specific instances of excessive pricing.