UK doctors will be drawn into new efforts to boost cost effective prescribing in the next few months as part of a deal agreed this month between the government and industry. The newly revised pharmaceutical price regulation scheme (PPRS), designed to cut the overall NHS drug bill by about 5% in its five year life, will result in two initiatives to change current prescribing practice.

The first initiative, to be phased in by 2010, introduces generic substitution, which is designed to save costs directly by ensuring that pharmacists switch from any branded drugs named on prescriptions to cheaper generic alternatives unless a doctor ticks a box to insist on the branded drug.

The second initiative, to be tested in pilot programmes from next year, will experiment with paying doctors to encourage them to prescribe newer, more effective drugs even when they are more expensive, in line with the latest guidance from the National Institute for Health and Clinical Excellence (NICE).

Industry estimates that about 17% of prescriptions cite a specific drug by brand, with the result that 17% of dispensed drugs are also branded. But with generic substitution, whereby the pharmacist can substitute the generic equivalent, the proportion should fall, in turn stimulating competition in pricing.

In negotiations with the government, industry preferred substitution to the originally proposed idea of imposing a flat 1.1% price cut on branded drugs for which the patent had expired as well as a cap on the price of these drugs at 50% more than their generic equivalents.

More importantly, industry has reached agreement for measures designed to stimulate and reward innovative drug development through “prescribing incentive schemes”; payment by results; and publication of the uptake of “clinically and cost effective medicines,” locally, nationally, and internationally.

The measures are designed to respond to industry’s frustration that the NHS lags behind many of its counterparts in other countries in using newer drugs, such as recently approved treatments for cancer.

The government will provide a better process in which companies that face having NICE recommend against the NHS paying for their drugs can reopen discussions about pricing with the Department of Health. It will also allow drug companies to raise the price of existing drugs if subsequent clinical data show additional cost and clinical effectiveness.

These measures, combined with fresh industry pledges to make drugs not yet approved by NICE more widely available, could help to defuse the current tensions surrounding expensive new cancer drugs.

Harpal Kumar, head of Cancer Research UK, welcomed the initiatives as a way to boost patients’ access. But the NHS Confederation warned that primary care trusts could need assurances of additional funds and improved access to the latest assessments to implement NICE guidelines more fully.

The new PPRS is staggered, with an initial 3.9% cut to the price of patented drugs due to start in February 2009.

The delay reflected lengthy discussion on the fine print and concerns that its introduction at the start of the year could stimulate more export of drugs by UK wholesalers to more profitable markets elsewhere in Europe, creating shortages in pharmacies in the holiday period.

BMJ 2008;337:a2699