The government is seeking a cut of 10 percent in the prices the state-run National Health Service pays for prescription medicines, the Financial Times reported on Monday.

Health minister Alan Johnson told the paper he planned to generate substantial savings in the drugs budget during talks to be completed by June on the agreement that covers the price to the health service of branded drugs.

Johnson said last August he planned to renegotiate the Pharmaceutical Price Regulation Scheme (PPRS) to ensure taxpayers get value for money.

The Financial Times said government officials were believed to have staked out an initial position with industry to cut the 11 billion pound annual medicines bill by at least 10 per cent, or about 1 billion pounds.

The demand is part of the health department's efforts to make savings of 3 percent a year, imposed by the Treasury as part of the comprehensive spending review announced last year.

Britain is a major centre for drug research, although the local market represents only 3 to 4 percent of global drug sales, making it a relatively minor outlet for firms such as GlaxoSmithKline and AstraZeneca.