Patients are set to benefit from wider access to medicines on the NHS after the government agreed a deal with the pharmaceutical industry on product pricing.

Under the revised Pharmaceutical Price Regulation Scheme (PPRS), the price of branded medicines is set to fall, allowing more cost-effective treatment on the NHS.

A 3.9 per cent price cut in the price of products sold to the NHS will be introduced from February 2009, with a further 1.9 per cent fall scheduled for January 2010.

Following discussion with relevant stakeholders, the Department of Health will adopt generic substitution from January 2010 in order to allow further price adjustments on an annual basis.

Other features of the agreement include a new non-contractual voluntary scheme providing stability and predictability in pricing, flexible pricing arrangements based on the success of products and greater patient access for drugs not adopted by the National Institute for Clinical Excellence.

Health secretary Alan Johnson said a more flexible approach to pharmaceutical pricing was "in everyone's interest".

The PPRS is designed to ensure the NHS has access to high quality branded medicines at "reasonable" prices.