Health insurers warn decision means most patients will pay higher costs
Health insurers have condemned a decision by the government to cap pharmaceutical price hikes for patients with privately insured plans on a sliding scale, saying the measure will mean many people will see higher drug bills as they move to new medicines.
In a key concession after months of fierce political infighting over the issue, the Department of Health and Social Care (DHSC) on Tuesday unveiled a cap on drug price hikes, which will gradually rise from 5% a year to 10% after five years.
“It’s clear to the government that the last government’s failed approach of trying to impose a cap solely on the NHS has failed and that we need to develop a system that works for everyone,” a spokesman said.
But health insurers, who have always opposed the cap being imposed directly on their customers, warned that the decision means that many privately insured patients will actually see a bigger burden of higher bills.
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As demand for some medicines rises, they also pointed out that because there is no cap on the NHS, they will face bigger costs on drugs for bowel cancer and for arthritis.
Dr Nick Scriven, a GP and vice president of the British Medical Association, also argued the new system should be applied to all consumers – whether privately or publicly funded – to ensure fairer competition.
“We have a responsibility to pay fair prices to the providers who produce the medicines that are used to treat people in our NHS,” he said.
“Our new pricing strategy is a step in the right direction, but more needs to be done to ensure fairer competition and prices in the market. We should be ensuring that patients across all sectors are covered by the same rules.”
As a result of the cap on NHS drug prices, the government expects the average overall cost to each NHS provider to increase by just 0.9%.
But the average total bill to patients in the private sector will go up by about 15%, up from an average of £440 to £540 per year to £555 to £620, according to figures from the National Institute for Health and Care Excellence (Nice), which advises the NHS.
There are 3.5 million people in the private health sector, but about three quarters of these people are employed by employers who pay for their insurance.
Overall, just over 4 million people in the NHS are privately insured, and it is this group that will feel the biggest impact of the move.
This is because the government’s decision affects only the treatment the NHS covers, with pharmaceutical companies currently usually not charged NHS-negotiated prices for private-sector drugs even if they also offer them to patients, like those in private health.
Once a product is on the NHS drug list, it is not on the market in the private sector, meaning it is costly to supply.
But the government’s move does not apply to medicines sold to patients by private health insurers.
It said the decision had been taken after considering feedback from different organisations and received one of the largest set of responses ever to the consultation on the subject.
“Our decision on raising the maximum cap on drug prices is recognition that paying a 5% price increase is far too high – we will reduce this to 3% in the NHS and then to 2% thereafter,” a DHSC spokesperson said.
However, health insurance experts are calling for patients to be covered by the same rules.
Prof Rick Dobbie, chief executive of eHealth.co.uk, an e-health insurance body, said the move will leave patients with a price increase when they switch from one drug to another.
“The [DHSC] seems to be reacting to pressure from Westminster, which is right, but they need to make sure the position is fair to everyone.
“The answer is to charge both companies (NHS and private) the same prices for drugs so that the NHS can capture the saving.”
He said ministers should make clear that patients should not be penalised simply because they are privately insured.