A new pricing deal for branded drugs will reduce the risk of shortages over winter but may not curb unexpected changes to medicine prices by manufacturers in the long term, industry bodies have warned.

The five-year pharmaceutical price regulation scheme (PPRS) will place a fixed limit on the amount the Department of Health (DH) will spend on branded drugs for the first time, the DH announced on Wednesday (November 6). But the sector was still deliberating about how much freedom manufacturers would have to change individual drug prices within this system.

In the short term, the agreement meant pharmacists would not suffer the same price cuts next year that they faced on January 1 in previous years, when PSNC has had to negotiate price concessions for the sector, PSNC and wholesalers said this week. But it would not prevent manufacturers from changing their prices at short notice, which was one of the greatest concerns for contractors as it could encourage medicines exporting and lead to shortages in the long term, PSNC warned.

The pricing deal for branded drugs will reduce the risk of shortages over winter but may not curb unexpected changes to medicine prices

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Under the PPRS, which is voluntary for manufacturers and comes into effect on January 1, 2014, NHS drug spending will remain at £12 billion for the next two years. It will increase by less than 2 per cent in the following three years, with any additional drug costs being shouldered by manufacturers, the DH said. This would generate significant savings for the DH compared with an average growth in drug costs of 5 per cent in previous years, the DH added.

Independent Pharmacy Federation chair Fin McCaul told C+D yesterday (November 7) that the scheme appeared to be good for contractors but he was waiting for the details of how much freedom manufactures would have to make changes to drugs prices.

In September, the British Association of Pharmacy Wholesalers (BAPW) warned that a predicted drop in drugs prices in January could lead to shortages, as wholesalers would have to reduce their stock of less profitable medicines in order to recoup lost money.

But Martin Sawer, chief executive of the BAPW,  told C+D this week (November 7) that the new fixed drug spend meant wholesalers were more confident they could meet the increased demand for medicines over Christmas. The organisation would continue to argue for restrictions on the changes manufactures could make to drug prices before the final pricing arrangements were agreed at the end of November, he said.

"We have some concerns that manufacturers are free to change the prices within the confines of the PPRS. We are asking for more notice of changes and perhaps a limit to the modulation allowed," he said.

PSNC and the BAPW had requested the inclusion of an obligation to supply pharmacists within 24 hours as part of the PPRS but it had not appeared in the finished agreement. "We are disappointed at the absence of any obligation and will continue our work to try and ensure there are effective requirements that support pharmacies getting the medicines they need," said PSNC chief executive Sue Sharpe.

Health secretary Jeremy Hunt said the agreement should ensure NHS patients received "the best and most advanced medicines in the world while managing the cost".

The Association of the British Pharmaceutical Industry said the agreement showed manufacturers recognised the financial challenges faced by the NHS but called for greater government investment in innovative medicines.