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Pharmacists urge DH to stamp out drug price ‘exploitation’

The RPS and a pharmacy prescribing advisor call for changes to prevent off-patent drugs being sold to the NHS at inflated prices

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).

CMA fines

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.”

Industry response

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"?

The Times gave examples of drugs that have increased in price since they were bought by Atnahs Pharma:

  • Sinepin – In 2013 the NHS in England paid pharmacists £3.77 for a 28-pack of 25mg tablets and £5.71 for 50mg antidepressant tablets. By November 2015, the price increased to £97 and £154, respectively. As a result, the NHS spent £5.1 million on Sinepin in 2015 – compared to £400,000 in 2013.
     
  • Welldorm – the insomnia treatment went from £12.10 a pack to £138.56, an increase of more than 1,000%, between 2014 and 2016.
     
  • Dipentum – the anti-inflammatory drug rose from £19.77 for a [acket of 250mg capsules and £21.18 for 500mg capsules, to £75 and £85 respectively, once the patent expired and it was sold to the NHS as olsalazine.
     
  • Gynest, a hormone replacement treatment, went from £4.67 to £24.98.

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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15 Comments

ali dalal, Community pharmacist

Activis are very good at this, discontinued antabuse which was £5 somebody or somewhere along those lines, the generic they brought the disulfuram is now £91, can't figure out how this can be justified. The packaging or anything didn't change, just the label

How High?, Community pharmacist

Easily sorted. New section in the DT with a set price for each product. Call it (ooh I don't know, Part MMVXXIL). Currently paying 80 quid for a box of Co-proxamol.....

Neo Pharmacist, Community pharmacist

colleagues beaware, some of this inflated prices are not reimbursed by PPa at the inflated price but rather price on the old brand.eg Glycopyronnium powder for iontophoresis  now costs £327 but ppa still reimburses at £266- even when endorsed with supplier price.  This has been an ongoing issue for 8 months but both PSNC and PPA cant get the sole manufactures to address the discrepancy. Do not think that only the NHS budget is affected but you own pockets.

Nicholas Whitworth, Pharmacy

I noticed this earlier on in regards to florinef (fludrocortisone) a pack of 100 was £5.02 suddenly it has been discontinued and now the generic (funnily enough from the same manufacturer) is £30 for a pack of 30!!! 

A.S. Singh, Community pharmacist

Do the MHRA have powers to rescind their drug licence and open up the market for cheaper costs? If they don't theres nothing the NHS can do

Yuna Mason, Sales

According to this document, category A prices are calculated based on the list prices from AAH / Alliance Healthcare (2/3 influence) and Teva/Actavis (1/3 influence). But what prices do AAH/AH submit? The most expensive generic, to drive up the reimbursement price? Or the price of the generic with the biggest margin? Anyone know?

https://tevascheme.tevauk.com/files/download/11

Ben Merriman, Community pharmacist

http://www.pharmaceutical-journal.com/opinion/correspondence/price-increase-after-debranding-of-branded-products/20069195.article

Ben Merriman, Community pharmacist

More examples:

betametasone/clioquinol cream (30g) £1.76 in May '12, £28.88 in June '16

chlortalidone 50mg tablets £1.64 for 28 in May '12, £88.00 for 30 in June '16

fusidic acid 1% mr eye drops (5g) £2.69 in May '12, £29.06 in June '16

nitrazepam 2.5mg in 5ml oral suspension £5.30 for 150ml in May '12, £114.00 for 70ml in June '16.

 

How about you stop this outrageous abuse of the tax payer to keep the fantastic service offered by the community pharmacy netwrok so valued by the people you're meant to work for, Mr Burt!

Andrew Martin, Primary care pharmacist

I'm lost: these are Category A lines which are defined in the intro to Part VIII of the Tariff as" The Secretary of State determines the prices for Category A drugs to be the average of the price calculated for the pack size listed in the Drug Tariff weighted by the following four manufacturers and suppliers; AAH, Alliance Healthcare (Distribution) Ltd, Teva UK and Actavis on or before the 8th of the month being reimbursed."

So how have 4 manufacturers come to raise prices simultaneously? I guess it all comes out of the same factory?

 

I saw this on the front page of The Times on Saturday and now wish I'd bought it!

Yuna Mason, Sales

As I understand it, these guys sell to AAH or Alliance Healthcare at the inflated price. Therefore, that becomes the price that AAH or Alliance Healthcare charge. They take their cut too, and the DoH doesn't have a clue how much that is either. But let's not bother investigating that, we'll close 3,000 pharmacies instead.

Ben Merriman, Community pharmacist

None of these lines are manufacturered by Teva or Actavis.  They use the average price charged by Alliance and AAH.  Which will be set by the manufacturers.

Ben Merriman, Community pharmacist

Why is this only being reported now?  I wrote to the PJ in Sptember and The Sunday Times picked this story up in October/November.  I also informed the CMA of this activity in December.  Howw on earth can the Department be willing to pay up to 8000% more for medicines (to the sum of about a quarter of a billion quid a year) but plan on closing up to 3000 pharmacies?  

Stephen Walsh, Community pharmacist

Ben. I wrote to my local MP about this in December last year when Nitrazepam 2.5mg/5ml went from £5.30/150ml(Somnite) to £114/70ml for the generic. I believe the same company was involved. It would have cost the NHS an extra £13000/year for this one item for one patient. 

The MP passed it on to the DoH. I was not greatly impressed by the reply from them.

Funnily enough though, after all this, I sent another letter to the same MP yesterday with the excellent spreadsheet you put together. I know another pharmacist did the same. 

 

Ben Merriman, Community pharmacist

I wrote to the CMA in December and have heard the square root of diddly squat so far...

Harry Tolly, Pharmacist

I wonder what the cost of these meds are to the vertically integrated wholesalers and what their margins are on these products.

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