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'Our analysis reveals the real reasons for generic price concessions'

"Three key factors resulted in generic price fluctuations and reimbursements in 2017"

Accord UK managing director Peter Kelly analysed recent generic price fluctuations – and found the average price per generic pack was £2.46 in 2017, and £2.80 in 2016

In 2017, the UK generic medicines market experienced an uncharacteristic amount of volatility. This created a number of headlines in the pharmacy trade and mainstream media, around the pricing and supply of generic medicines. 

At Accord UK, we wanted to fully understand the circumstances that led to the volatility the media were reporting, and whether the situation was actually as clear as was being reported. We set out to analyse the impact of the changes in generic medicine pricing and reimbursement, and to share the findings to reflect and provide context on what was an interesting period.

Our analysis showed there were a number of factors that resulted in the changes in generic medicine prices and reimbursement in 2017, but three key areas stood out:

Firstly, market factors – such as currency fluctuations after the Brexit referendum, and regulatory changes including the withdrawal of various good manufacturing practice (GMP) certificates – combined with an overall squeeze on reimbursement pricing, had a significant impact.

Secondly, our analysis showed that in 2017 there was a clear increase in the numbers of generic medicines granted a concessionary price compared to the previous year, and the value of the concessionary price.

Also, our data revealed the total value of generic medicines reimbursed through being granted price concession status was approximately £75 million in 2016, rising to approximately £340 million in 2017. While this is a significant increase, our research indicated it is only part of the picture, and required further exploration.

Finally, we looked at the average reimbursement price for generic medicines in 2016 and 2017. Clearly, throughout 2017, there were significant challenges for all in the supply chain – as the UK generic medicines market was more turbulent than we have seen in recent times.

This 'perfect storm' created lots of logistic, commercial and political pressure. Yet despite the challenging environment, community pharmacies still ensured that patients continued to receive their medicines.

Our analysis provided context on the economic elements of how this all played through to reimbursement pricing. It also demonstrated that in the widest context, the market actually did continue to function, despite the challenges created by currency fluctuations and manufacturer withdrawals, alongside a changing UK political landscape.

Our calculations showed that in 2017, the average price for a pack of generic medicine was £2.46 which, despite the volatility of the market, is actually a decline in real terms versus 2016 – when we estimate the average price per pack was £2.80.

Contrary to the headlines, the £2.46 average price – across more than 1,000 generic medicines that supply a volume of more than 1.1 billion packs of medicine a year – shows the UK market is working and still getting very good value for its generic medicines. After updating our analysis, the year-to-date September 2018 figures are showing that the same picture is continuing to emerge in 2018.

Peter Kelly is managing director of generic drug manufacturer Accord UK. The full analysis is published in an Accord UK white paper.

3 Comments

A very simplistic analysis which naively confuses correlation with causation. Struggle to see how Accord can infer anything without either using rigorous econometric methods or basic cost data. C&D should screen what they put up first if they want to be taken seriously. 

Tony Schofield, Community pharmacist

Well that’s great then. A patronising contribution from a vested interest. What happened to the purchase profit in the BHS contract? Why do we still not know the margin from 12 months ago? What sort of complacent nonsense is this....or....what is the agenda?

Dave Downham, Manager

"...the UK market is working."

For whom?

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