The NHS uses approximately £8 billion of its annual budget to buy branded medicines for prescription.  The prices it pays to the drugs companies are currently regulated by the Pharmaceutical Price Regulation Scheme (PPRS).  The OFT opened a review into the system in the autumn last year and has now announced that it will be pressing ahead with its internal examination rather than referring the matter to the Competition Commission.  By looking at alternative models and practices in other countries, the regulator aims to determine whether the PPRS delivers on its target - to provide for a system which recognises the competing expectations of buyer and seller in the market.  That is that the NHS must be offered reasonable prices whilst at the same time maintaining an incentive for pharmaceutical companies to undertake research and development.  

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