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Claxton, K. (2007) OFT, VBP: QED? Health Economics, 16 (6). pp. 545-558. ISSN 1057-9230

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The report by the Office of Fair Trading (OFT) on the UK pharmaceutical price regulation scheme (PPRS) recommends the reform of the current scheme, which is a combination of profit and price controls, to one where price is based on the health benefits offered by a pharmaceutical. On closer examination some of the more commonly expressed concerns about these proposals do not seem to be well founded. In principle, the OFT's recommendations may contribute to allocative and dynamic efficiency in the NHS. However, there are some dangers and the details of how it will be implemented are crucial. For example, value-based pricing with an inappropriate threshold for cost-effectiveness, or an inappropriate pricing structure, could lead to technologies being adopted at prices where their benefits, in terms of health outcome, do not offset the health displaced elsewhere in the NHS, a situation in which the NHS is damaged rather than improved by innovation. A failure to account for uncertainty and the value of evidence in negotiating prices and coverage could also undermine the evidence base for future NHS practice. Whatever view is taken, the OFT report will inevitably shape the scope of future policy debates about value, guidance, price and innovation.

Item Type: Article
Institution: The University of York
Academic Units: The University of York > Centre for Health Economics (York)
The University of York > Economics and Related Studies (York)
Depositing User: York RAE Import
Date Deposited: 28 May 2009 10:55
Last Modified: 28 May 2009 10:55
Published Version: http://dx.doi.org/10.1002/hec.1249
Status: Published
Publisher: John Wiley & Sons
Identification Number: 10.1002/hec.1249
URI: http://eprints.whiterose.ac.uk/id/eprint/6254

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