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Drugs revamp could save half a billion

Half a billion pounds could be saved by reforming the way the NHS pays for drugs, the Office of Fair Trading has claimed.

To the concern of the pharmaceutical industry, the office is recommending a major overhaul of the Pharmaceutical Price Regulation Scheme.

The moves could see a clampdown on the prescribing of some expensive drugs that the OFT said might have limited benefits.

Currently the PPRS allows companies to set their own prices for medicines, in return for a cap on overall profits. The OFT wants a new system where the price paid for drugs reflects their actual patient benefit.

In areas such as high blood pressure and cholesterol, it said hundreds of millions of pounds was spent on products which were much more expensive but little more effective than rivals. It concluded that £500m 'could have been put to more cost effective use' in 2005.

If taken forward by the Government, the recommendations could lead to a major reallocation of drug spending.

John Fingleton, chief executive of the OFT, said: 'Focussing prices on the needs of patients rather than on the costs of drug companies would be good for both patients and for business. It would focus drug company innovation and investment on the areas where patients need it most, creating more valuable drugs in the future.'

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