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BGMA: Undue criticism of generics pricing 'winds me up'

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Warwick Smith: It's really important to get the right procedure for deciding if a price is set correctly
Warwick Smith: It's really important to get the right procedure for deciding if a price is set correctly

The British Generic Manufacturers Association (BGMA) has stressed “there might be a good reason for a price to go up”, following a government bill to cap drug pricing.

The association's director general Warwick Smith said the Health Service Medical Supplies (Costs) Bill – which received royal assent last month (April 28) – is designed to encourage greater transparency throughout the supply chain, when it comes to generics drug pricing.

The Bill follows a government watchdog’s on-going investigation into “suspected unfair pricing” as part of which manufacturer Pfizer and distributor Flynn Pharma were fined a total of nearly £90 million for overcharging the NHS for anti-epilepsy drug phenytoin sodium, while Actavis was accused of hiking the price of hydrocortisone tablets by over 12,000% in eight years.

The Bill will allow the government to intervene in the market to encourage “reasonable prices”, Mr Smith told C+D in an exclusive interview on Wednesday (May 24).

However, he added that the sector "needs to agree the sort of data and benchmarks" that companies will be governed by when deciding drug prices, before any further criticism is made of “disproportionate price rises in generics”.

“I don’t mind being criticised if we’ve done something wrong, but if we haven’t done anything wrong – because the data is not clear – that winds me up a bit,” Mr Smith said.

Price hiking

“The prices we see quoted in the press are normally reimbursement prices, and because of the way the drug tariff works, those reimbursement prices may be a lot higher than the actual prices charged by manufacturers,” Mr Smith (pictured below) explained.

“One of the things the Bill does is allow the NHS to see the actual sales prices, and prices charged throughout the supply chain – so what the manufacturer and wholesaler charges, and what the pharmacy pays for all products.”

Mr Smith said there are only a “small number of products where the price appears to have gone up for no good reason”.

The BGMA “would never defend an unreasonable price”, but there might be genuine reasons why the price of a generic drug has increased, including an increase in the cost of ingredients, a shortage, or even regulatory intervention, he added.

Future interventions

“Current arrangements work extremely well for the vast majority of generics, and we continue to have the lowest prices in Europe,” Mr Smith pointed out.

“What we should be able to do is identify those products where further intervention is necessary and have an understanding of what would trigger that further investigation.

“It is really important to get the right data collection and the right procedure for deciding if a price is set correctly or not,” he said.

7 Comments
Question: 
Have you noticed the price of generics increase recently?

Leon The Apothecary, Student

We pay far too much for medicines overall. We could cut the BNF in half with the removal of the amount of alternative, clinically similar, drugs. Then take free markets like America for profit hungering tactics. Warwick Smith would do well to keep his overwhelmingly selfish opinions to himself.

Ilove Pharmacy, Non Pharmacist Branch Manager

Let's be clear, this is bordering on the criminal. 

Ben Merriman, Community pharmacist

I've just done some sums.  Based on data available from NHS Digital (http://content.digital.nhs.uk/searchcatalogue?productid=24513&topics=0%2fPrescribing&sort=Relevance&size=10&page=1#top), primary care in Cumbria in the month of December 2016 spent over £280k more on 63 different medicines compared to what those same medicines would have cost in December 2012.  

£285k in one month.  That's equivalent to £3.4m in a year for a county with around half a million people.  That money should be spent on primary care services, not by primary care for medicines that have had prices jacked up for, as yet, no good reason (of course, BGMA don't comment on individual cases but these prices don't matter as lots of other generics are dead cheap!).  

As yet unknown numbers of pharmacies across the country could soon be closing due to wreckless cuts imposed by DH.  The sooner this Act is implemented and this money saved, the better.

Caring Pharmacist, Community pharmacist

Old Generic drugs are now costing more than new drugs coming to the market.How strange.No new research went into these old generic drugs and hence no reason for them to be expensive.PUT A MAXIMUM CAP ON THESE PRICES ASAP.These extortionate prices are draining the NHS money and affecting vital services. Generic manufatures are definitely abusing the loophole in the regulations to charge whatever price THEY DESIRE. They work in collusion with wholesalers esp Alliance and Celesio to fix these high prices.

Ben Merriman, Community pharmacist

In my nearly three years of looking in to this, I'm yet to have one single, solitary reason for any of the price increases on some ninety odd medicines that have had a significant price increase since their debranding.  I have said all along that if there is a reason for hydrocortisone 10mg tablets costing £0.70 for 30 tablets in March 2010 increasing to £87.85 in March 2016, I, my pharmacy colleagues and most importantly tax payers would be delighted to hear it.

I look forward to taking you up on your offer, meeting you and hearing what you have to say, Mr Smith.

Clive Hodgson, Community pharmacist

Agreed Ben.

I have also noticed a situation when generic X becomes unavailable. On its return to the market, invariably accompanied by a substantial price hike, the dates on the packaging often suggest manufacture long before the period of unavailability. 

Could it be that some of these “supply issues” are being engineered with the generic being stockpiled pending a suitable rise in the price before its return to the market?

N O, Pharmaceutical Adviser

Absolutely. NCSO oooooohhhh!!! Olanzapine, quetiapine etc. etc. yet to come on NCSO list, yet the prices are higher than the the branded version !!!! Why ???

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