16 October 2002

REVIEW OF THE MAXIMUM PRICE SCHEME

Lord Hunt, the Parliamentary Under Secretary of State for Health, today announced the start of a review of the statutory maximum price scheme for generic medicines.  

Details of the review are set out in the attached consultation document. The document invites interested parties to contribute to the review and formally consults on the Government’s proposals for rolling the scheme forward unchanged pending decisions on arrangements for the longer term. In summary it:

· provides a brief background to the scheme and reasons why a review is taking place;

· sets out the Government’s proposals for the future of the scheme following the review and invites comments;

· sets out the timetable for the review and implementation of its conclusions.

The document is available on the internet at www.doh.gov.uk/generics.

A list of those to whom this letter and the attached document have been sent is in the annex to this letter.

Comments from interested parties should be sent by e-mail to generics@doh.gsi.gov.uk or by post to Generic Medicines Project, Room 138A Richmond House, 79 Whitehall, London SW1A 2NS by Friday 29 November 2002.

Yours sincerely

 
Mike Brownlee

Head of Pricing and Supply Branch

Medicines, Pharmacy and Industry Division

Tel: 020 7210 5400

Email: michael.brownlee@doh.gsi.gov.uk

CONSULTATION DOCUMENT

Wednesday 16 October 2002

REVIEW OF statutory maximum price scheme for GENERIC MEDICINES SOLD TO COMMUNITY PHARMACIES AND DISPENSING DOCTORS

Summary 

1. Lord Hunt, the Parliamentary Under Secretary of State for Health, today announced a review of the statutory maximum price scheme for generic medicines sold to community pharmacies and dispensing doctors in the UK. This consultation document - 

-provides a brief background to the scheme and reasons why a review is taking place;

-sets out the Government’s proposals for the future of the scheme following the review and invites comments on these;

-sets out the timetable for the review and implementation of its conclusions.

 2.Comments on the Government’s proposal to extend the scheme are invited by Friday 29 November 2002

Background

3. The statutory maximum price scheme came into operation on 3 August 2000 following a period of consultation with interested parties. Its purpose was to protect the NHS from the effect of large increases in the price of many generic medicines in the course of 1999.It applies to certain unbranded generic medicines sold to community pharmacies and dispensing doctors for NHS use. It prohibits the sale of such medicines to community pharmacies and dispensing doctors at more than the maximum price. The maximum prices were set primarily by reference to average prices in the Drug Tariff for November 1998 to January 1999, with certain adjustments made in the light of consultation with interested parties.

4. A copy of the Department’s letter of 18 July 2000, giving full details of the scheme, including a list of maximum prices, is on the internet at www.doh.gov.uk/generics.

5. Under EU Directive 89/105/EEC a review of the scheme was undertaken within twelve months of its coming into operation and a consultation document was issued during July 2001.On 18 October 2001, the Department announced a decision, taken in the light of consultation with interested parties, to roll forward the scheme unchanged. The Department is now undertaking a further review under EU Directive 89/105/EEC. To comply with that Directive, the consultation period will be less than the twelve weeks recommended by the Cabinet Office Code of Practice on Written Consultation.

Scope of the Review

6. Interested parties are invited to contribute to the review by commenting on any aspect of the statutory maximum price scheme.

7. We should be grateful if comments could be accompanied by a justification.

Assessment of the Current Statutory Maximum Price Scheme

8. The Government continues to assess the current statutory maximum price scheme and draw conclusions.

9. The Government believes that the scheme continues to meet its objectives. It has protected the NHS from a reoccurrence of the price increases that occurred in 1999.Reimbursement prices for generics – the prices paid by the NHS – remain close to their level before the onset of those price increases. Since the introduction of the scheme the supply of generics to community pharmacies and dispensing doctors has remained stable.

10. The Government is considering arrangements for the longer-term reimbursement of generic medicines and after further consultation will be announcing decisions in the next few months. Pending these decisions the Government believes that the maximum price scheme should remain in place to maintain stability in the supply of generic medicines.

11. The Government has considered whether the current level of maximum prices remains appropriate. Economic factors do not, in our view, support the case for an adjustment in the level of maximum prices in either direction. We therefore propose to leave the level of maximum prices unchanged.

12. The scheme, as implemented on 3 August 2000, also required manufacturers and suppliers to supply certain information in respect of sales of generics for the years ending 31 December 1999 and 31 December 2000. The data submitted provided information that is informing the Government’s consideration of arrangements for the longer-term. We do not propose to collect any further information as part of the present statutory maximum price scheme.

13. The Government does not propose any other changes to the scheme.

14. In summary, the Government proposes that

-the statutory maximum price scheme should be rolled forward for a further period, pending decisions on longer-term arrangements for the supply and reimbursement of generics

-there should be no change in the list of preparations to which the scheme applies or in the level of maximum prices.

-no further information should be required to be submitted as part of the maximum price scheme.  

15. We would welcome the views of interested parties on these proposals.

Timetable for the Review and Implementation of its outcome

16. The proposed timetable for the review and implementation of its outcome is as follows.

Conclusion

17. Interested parties are invited to comment on any aspect of the statutory maximum price scheme.

18. The contents of this consultation document are also available on the internet at www.doh.gov.uk/generics.

19. Comments should be sent, by Friday 29 November 2002, by e-mail to generics@doh.gsi.gov.uk or by post to Generic Medicines Project, Room 138A Richmond House, 79 Whitehall, London SW1A 2NS.

 RECIPIENTS OF THIS LETTER AND ATTACHMENT

Association of the British Pharmaceutical Industry

British Association of European Pharmaceutical Distributors

British Association of Generic Distributors

British Association of Pharmaceutical Wholesalers

British Generic Manufacturers Association

The Consumers Association

Dispensing Doctors Association

General Practitioners Committee – British Medical Association

The Patients Association

Pharmaceutical Services Negotiating Committee