The adage goes that “things are seldom what they seem”. 

Well, when it comes to branded generics, that certainly would appear to be the case. The recent Isle of White bribery allegations relating to branded generics are likely the tip of the iceberg. Depending on its outcome, this high-profile court case may well lift the lid on possible schemes to put profit before patients and bring some holistic thinking to the merits and pitfalls of clinical commissioning groups’ (CCG) policies on this issue.

Branded generics have been around for 20 years or so. The theory is simple. Take a molecule like metformin, reinvent it as a new brand and shift it from market-priced cost centre A to a more expensive cost centre B, then market it to undercut the generic offerings and rebate some of the savings through incentives. As for pharmacy contractors? Ignore them.

In my opinion, this ploy lacks transparency, is unfair to contractors and threatens the new services and future roles for the network – to say nothing of its impact on patient care. 

Firstly, let’s look at the flaws underpinning these apparent cost savings. When a drug escapes category M and becomes branded, it is no longer subject to free market procurement. The downwards pressure from competitive tendering is removed and the branded equivalent is shielded from market competition. In my opinion, contracts with CCGs based upon a snapshot price concealed in rebates and shielded from free market forces is not a good deal for taxpayers or patients alike. It seems to me the CCGs are using the wrong spreadsheet here. 

Surely, the real cost to the government is those wholesale exit costs to the pharmacy? Wholesale exit costs form the basis of the applied uplift, which shapes the drug tariff part VIII reimbursement.

Branding high volume generic molecules in this way is threatening to further destabilise the viability of community pharmacy and the potential quantum of margin delivered to contractors. 

What’s more, could the branded generics market have untold ramifications for category M? The government has pledged £800 million of retained margin within the system. Distorting the overall drugs bill in this way is likely to impact the very profits that add value to taxpayers and keep UK drugs expenditure as one of the lowest among the countries under the Organisation for Economic Co-operation and Development. 

It seems that GPs prescribing these drugs are implicated by ignorance only. It is the CCGs that are benchmarking these “savings” to suit their budgets. Sophisticated software is driving these switches as the practioners' power to override looks negligible. 

Forgetting the commercial pitfalls for a moment, has anyone actually undertaken an impact assessment to ascertain the impact of the rise in branded generics on patients and pharmacy teams alike? 

Their introduction is impacting upon availability and means patients are encountering shortages by postcode. Sourcing unavailable stock is now a mounting headache for overstretched, underfunded pharmacy teams. This has a patient safety dimension too as patients cannot access their medication in a timely manner in some cases. 

Certainly, branded generics pose more questions than they answer – both for patients and the national contract.

Leyla Hannbeck is CEO of the Association of Independent Multiple pharmacies (AIMp)