A National Audit Office (NAO) investigation last week (June 8) into generics prices referred to government evidence of “unexpected increases in wholesalers’ margins, which it could not fully explain”.

The NAO launched its investigation to find out why “significant unbudgeted pressure” had been placed on clinical commissioning groups by rising prices of “certain” generic medicines bought by pharmacies in 2017-18.

Martin Sawer, executive director of the Healthcare Distribution Association (HDA) – whose members include Alliance Healthcare, AAH and Phoenix – told C+D yesterday (June 12) that it “does not know why the NAO has concluded as it has”.

When asked by C+D which wholesalers had experienced “unexpected” margin growth and by how much, Mr Sawer stressed that the HDA “cannot and does not discuss commercial issues”.

Although “HDA members handle more than 90% of NHS medicines by volume – including brands, generics and over-the-counter [products] – they only account for fewer than 20” out of “over 2,100” wholesaler licences, he stressed.

While the HDA represents “the larger wholesalers and distributors” across the UK, “the remainder of the generic suppliers will be the larger chains of pharmacies, individual manufacturers and smaller wholesalers who all wholesale and re-wholesale”, Mr Sawer explained.

50-minute chat only

The HDA is one of a number of groups the NAO “interviewed or received written evidence from” to inform its investigation, the office said, but Mr Sawer stressed the HDA’s meeting amounted to a “50-minute introductory chat” only.

“Neither the NAO or the [Department of Health and Social Care] has reviewed or audited any HDA member company’s financial accounts,” he added.

“The HDA and its members have not been shared any data by the NAO which supports the report’s conclusions.”

“Distributed at a loss”

When the individual price of each pack is taken into account, the “vast majority” of medicines are “distributed as a loss” by HDA members, Mr Sawer claimed.

While wholesalers are legally obliged to maintain a continuous supply of medicines, “there is perhaps not uniformity across all licence holders”, Mr Sawer said, which could explain some of the shortages of medicines pharmacies have experienced.

On Monday, Dorset contractor Mike Hewitson called for “radical action” to crack down on wholesalers linked to increases in generics prices.