A value-based pricing system for medicines purchased by the NHS could "stifle innovation" in the pharmaceutical sector, the Association of the British Pharmaceutical Industry (ABPI) has warned.

As the ABPI geared up to begin its negotiations on a new drug pricing scheme with the Department of Health (DH) next month, chief executive Stephen Whitehead warned that a value-based pricing system could "stifle innovation because it will struggle to accurately reflect the inherent gradual and incremental nature of innovation".

"We are unclear if value-based pricing will be able to provide the pharmaceutical industry with sufficient reward to allow for further investment" Stephen Whitehead, ABPI

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"We are unclear if value-based pricing will be able to provide the pharmaceutical industry with sufficient reward to allow for further investment in the research and development of new medicines," he said. The government wants to introduce a new medicines pricing system that will incorporate value-based pricing from January 1, 2014, to replace the existing Pharmaceutical Price Regulation Scheme (PPRS).  The value-based system is intended to give patients better access to medicines and to achieve value for money for the NHS. It is expected to apply to branded medicines that come onto the market from January 1 next year, but may also apply to a small number of existing medicines.

 The DH and the ABPI published a joint statement last week (August 3) setting out some of the principles that they will look to follow during the negotiations on the new arrangements.

According to the statement, a successor scheme to the PPRS will be agreed to cover most medicines available already. This scheme is likely to operate for five years to "ensure stability and predictability" and "enable the NHS and the industry to develop and manage their financial and investment plans".

Pharmacy Voice chief executive Rob Darracott said his organisation was "supportive of the broad aims of value-based pricing", but said it should not be assumed that such a system would provide cheaper medicines.

Mr Darracott also encouraged the Department of Health and the ABPI to make sure that the emerging system did not "generate any unintended consequences which place further stress on the medicines supply chain". "Value-based pricing needs to make reference to international pricing, and also be sensitive to the re-imbursement mechanisms for pharmacies," he said.

And PSNC chief executive Sue Sharpe called on the Department of Health to make the supply of medicines a "priority" in forthcoming PPRS negotiations. "Any arrangement must ensure that pharmacies can obtain the medicines they need for their patients promptly and have effective systems for monitoring and ensuring compliance with those requirements," she said.