The Labour Government has finalised a deal with the pharmaceutical industry that will allow more patients to benefit from a wider range of drug treatments at a fair cost to the NHS.

The flexible pricing scheme agreed will cut the price of many drugs to the NHS while encouraging continued innovation in the industry – allowing patients to have faster access to new medicines which are clinically and cost effective.

The agreement with the industry will produce:

* a 3.9 per cent price cut in the cost of drugs sold to the NHS in February 2009
* a further price cut of 1.9 per cent in January 2010
* a new scheme providing stability and predictability in Pharmaceutical Pricing for the next 5 years
* new pricing arrangements that will enable drug companies to supply drugs to the NHS at lower initial prices – with higher prices later if value is proven
* action to support innovation in drug creation

Labours Health Secretary, Alan Johnson said:

"A more flexible approach to pricing is in everyone's interest. It gets clinically and cost effective drugs to more patients - providing cheaper options where clinically appropriate - delivers value for money for the NHS and the tax payer, and creates a better market for the pharmaceutical industry while supporting research and innovation.

"Patient access schemes together with flexible pricing of pharmaceuticals will also enable the NHS to offer more patients a wider range of more expensive drugs as recommended by the National Cancer Director Mike Richards in his recent Report on improving access to medicines for NHS Patients."