LONDON (Reuters) - Britain's Department of Health is considering cutting some drug prices by between 10 and 20 percent as part of a drive to ensure the state healthcare system gets good value for money.
Governments across Europe have been taking a tough line on medicine costs as stagnant economic growth hits budgets.
The planned price cuts would apply to branded drugs not covered by the voluntary Pharmaceutical Price Regulation Scheme (PPRS) - a long-standing arrangement between government and the drugs industry.
A consultation on the price cuts was announced on Thursday as the government set out plans to study the benefits that medicines bring to wider society.
"We cannot simply spend more and more on drugs - this would mean spending less and less elsewhere," health minister Lord Howe said in a statement.
The country's healthcare cost agency, the National Institute for Health and Care Excellence (NICE), will study the impact drugs can have on people's ability to work or contribute to the economy and society.
"A drug that brings a lot of extra benefits may justify the NHS (National Health Service) paying more, but equally the NHS might pay less for a drug that does not deliver wider benefits," Howe said.
NICE will be responsible for assessing new medicines as part of a novel system of "value-based pricing" that the government plans to bring in from January 2014.
The new system will initially apply only to new branded prescription drugs, since it would not be feasible to carry out a value-based assessment for each medicine already on the market.
Reporting by Ben Hirschler; editing by Keith Weir and Elaine Hardcastle