The Royal Pharmaceutical Society and a senior pharmacist have called on the Department of Health (DH) to clamp down on “cynical and exploitative” pharmaceutical companies that inflate NHS prices for generic and off-patent drugs.
An investigation published in The Times last Friday (June 3) found that several UK pharmaceutical companies have made “vast sums” of money by buying the rights to drugs with expired patents, then increasing the price of the drugs to the NHS by as much as 12,500%. This adds an extra £262 million to the NHS drugs bill every year, the newspaper claimed.
The companies have bought the rights to medicines that have been off-patent for several years. This moves the drugs from Category C to Category A, and means the new owners are able to set their own price for drugs that are not made by any other manufacturers.
The Times alleged that four companies routinely charge the NHS many times more than the original price (see box, below).
The practice is not illegal, but is extremely controversial. In April this year, the business watchdog the Competition and Markets Authority fined global pharmaceutical giant Pfizer £10,000 for abusing its dominant position, along with UK company Flynn Pharma, by charging "excessive and unfair” prices in the UK for phenytoin sodium capsules.
Last year, the government ran a consultation on limiting drug prices and manufacturers’ profits, which suggested several options – including publishing a list of maximum prices.
The document said “there are challenges relating to price controls and enforcement which we need to address.” The consultation closed in December 2015, and the outcomes are yet to be published.
Impact on pharmacy contract
The RPS told C+D it endorses the consultation response submitted by the Pharmaceutical Advisers Group (PAG), which represents prescribing advisers at clinical commissioning groups (CCGs).
Nick Beavon, chair of the PAG and chief pharmacist at NHS Wandsworth CCG, called for the DH to tackle companies that are “gaming” the market – but said any changes would be difficult to implement.
“The problem with [price] fixing is that some list prices for proprietary drugs tend to be fixed globally. You could have a process in place for NHS rebates, but you couldn’t change the list price," he told C+D.
“The government expects to get a certain amount of money back for drugs, and this is wired into the pharmacy contract. So any changes would be really difficult.”
Mr Beavon described the drugs highlighted in The Times' investigation as “slightly unusual examples” – but said the companies had “put the government in a difficult position.”
The British Generic Manufacturers' Association (BGMA) called the examples in the investigation “anomalies”. It pointed out that competition from generic medicines saves the NHS in England and Wales £13.5 billion a year. The “reimbursement of generic medicines generates a further £800 million margin for community pharmacists," it added.
“We have been discussing for many months with the DH and other stakeholders changes to the system of reimbursement. We look forward to changes being introduced before long to make our efficient and highly cost-effective systems even better.”
However Dr Richard Torbett, executive director commercial at the Association of the British Pharmaceutical Industry (ABPI), called the pricing behaviour “cynical and exploitative”.
“Any inappropriate behaviour around the pricing of these old medicines should quite rightly be tackled. The ABPI supports this and is in discussion with government about how best to ensure appropriate pricing throughout the system,” he added.
Which drugs are being “exploited"?
In a statement, the company said the average sales price of a packet its medicines was £18.20 in 2014-15, compared to the average branded medicine price in the UK of £20.95 and the current prescription charge of £8.40.
How best can "exploitative" pricing be tackled?
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