UK's coalition government has identified drug prices as an area of cost containment

The UK is ranked second among the 10 Western European markets surveyed in Business Monitor International's Business Environment Ratings for first-quarter 2011, moving up from fifth position in the previous quarter.

However, BMI points out, while it is one of the most developed pharmaceutical markets in the world, pressing economic and political issues, combined with its strict pricing and reimbursement regimes have formed major clouds on the pharmaceutical market's horizon.

Highlighting the dimming outlook, the UK's coalition government has identified drug prices as an area of cost containment, aiming to implement a new value-based medicine pricing system to replace the current Pharmaceutical Price Regulation Scheme (PPRS), due to come to an end in 2013. BMI notes that the implementation of a value-based pricing system will eradicate the UK's position as one of the few markets in the world where drugmakers are free to set prices for their medicines. The adoption of a value based medicine pricing system will also replace the NICE's health technology assessments, which in essence dictate a medicine's availability on the NHS.