Drug industry gives up legal battle over new UK cost curbs

By Ben Hirschler

LONDON (Reuters) - Britain's pharmaceuticals industry has thrown in the towel in a legal battle over new cost curbs imposed by the state-run health service, after failing to secure a judicial review.

Drugmakers argue the curbs, imposed earlier this year, have the potential to cause significant delays for patients waiting for treatment for a range of conditions, including for cancer, heart disease and diabetes.

The Association of the British Pharmaceutical Industry (ABPI) said on Thursday, however, that its board had agreed unanimously not to appeal after a High Court judge turned down its review application on Wednesday.

The new policy limits funding of medicines if they are likely to cost the National Health Service (NHS) more than 20 million pounds ($26 million) a year in any of their first three years of use.

The system was implemented by the National Institute for Health and Care Excellence (NICE). NICE's own analysis shows that around one in five new medicines will be affected by the decision, which brought to a head a long-running argument about drug rationing within the NHS.

The new rules mean drugs above the 20 million pounds threshold will be subject to an additional negotiation process, even if they are deemed cost-effective, resulting in a potential delay of three years.

NICE counters that the onus is on drugmakers to price medicines responsibly.

The ABPI represents international drugmakers operating in Britain, as well as the country's two big domestic suppliers GlaxoSmithKline (GSK.L) and AstraZeneca (AZN.L). GSK, however, did not support the ABPI action and AstraZeneca expressed reservations.

For the last 18 years Britain has led the way in measuring drug cost-effectiveness in a rational and dispassionate way, using a model of economic benefits developed by NICE. Meeting rising demand from medical advances and ageing populations is, however, a growing problem for the cash-strapped NHS.

NICE has inspired copycat agencies across Europe - and in countries as diverse as South Korea and Mexico - giving it an influence beyond Britain's 3 percent slice of global drug sales.

(Reporting by Ben Hirschler; Editing by Susan Fenton)