The UK pharmaceutical market. An overview

Abstract

The National Health Service (NHS) accounts for more than 98% of the UK prescription medicines market, which is the sixth largest pharmaceutical market in the world. Most of this market is driven by the UK's approximately 35,000 general practitioners (GPs). It is an open market, with most leading foreign pharmaceutical companies having a strong presence. While the growth rate of this market has been decelerating, it remains one of the fastest growing components of NHS expenditure. The NHS does not operate any kind of national reimbursement list, but the UK government has adopted several means to keep medicines expenditure under control. These include cash incentives and constraints for GPs relating to expenditure on medicines, individual quarterly updates on GP prescribing, the publication of a list of medicines that cannot be prescribed by GPs, the switching of some prescription-only medicines to over-the-counter medicines, and a co-payment system. The main form of economic regulation in the UK, however, remains the Pharmaceutical Price Regulation Scheme (PPRS). This limits the rate-of-return on capital attributable to medicines sales to the NHS, with the intended rate-of-return being equal to that of UK industry overall. The pharmaceutical industry has generally performed relatively well in the UK market, managing to preserve incentives to innovation. This reflects the fact that UK GPs have been able to maintain their clinical freedom, as well as government recognition of the economic contribution made by the pharmaceutical industry. Current issues of interest in the UK pharmaceutical market context include the future of the PPRS, the debates over the imposition of a national formulary and generic substitution, and over parallel trade, the potential impact of managed-care protocols and computer-based prescribing on pharmaceutical expenditures, and possible political changes.