Leading article: The price of drugs does not work

At a time of general cutbacks, it is perhaps not surprising that commercial interests are searching high and low to find new ways of making money. But the way a few drug companies are structuring their prices smacks of cynical targeting and exploitation.

A group of consultants and patients' representatives is calling on the Government to halt a practice whereby companies can rake in profits by charging very high prices for drugs that have required little or no additional research. They accuse the companies of modifying relatively common drugs and licensing the new version as a treatment for a rare, or "orphan", disease. The money-making secret is that these treatments can be priced many, many times higher than the existing drug, thanks to legislation designed to encourage companies not to neglect rare diseases. As sole suppliers, the licence-holders then charge pretty much what they like.

What is happening is clearly an unintended, and most unwelcome, consequence of provisions that were designed to bring about something quite different. But the question of drug pricing is wider than the single question of how to root out such distortions. Successive governments have resisted price controls in part because Britain is a net exporter of pharmaceuticals and the price of new drugs here tends to set the international standard. In fact, though, our lack of controls makes us an exception in Europe.

This, though, could be changing. The Government recently announced that NICE, while continuing to advise on the cost-effectiveness of treatment, would no longer have the last word on whether a drug was supplied to the NHS. This decision would pass to doctors, and pricing would switch to a value-based system.

The NHS has enormous purchasing power, yet it seems, over the years, not to have exploited this as it could have done. As in so many areas – GPs' salaries and IT projects spring to mind – government departments have proved inadequate negotiators. The drugs bill is something that cries out for a more rigorous approach. The call from consultants and patients is a useful straw in the wind.