I think I understand the law of supply and demand. It’s why the price of gold is higher than that of plastic, even though the latter is infinitely more practical, and why the increasing output of pharmacy students has pushed down locum rates.
But what about artificial shortages created to drive up the price of commodities? The city traders understand how money can be made this way, so will bet on the price of a commodity such as coffee when the harvest is poor. And it’s the same with drugs.
Today I’m with Alex. Alex has been a trader for City of London stockbrokers Bellends since the late 1990s. He used to trade commodities like oil and wheat, but now Alex says the real money is in pharmaceuticals. I ask him to explain.
“I used to think the big bucks were to be made in oil or precious metals, until a pharmacist friend explained the pricing of prescription drugs. It seemed to me too good to be true – that manufacturers and wholesalers can set their own prices and the NHS will just pay it. Soon it was obvious how to make money from this.
“First you take a perfectly ordinary run-of-the-mill drug like sumatriptan – one that’s out of patent, but hasn’t saturated the market. Then when your next consignment enters the UK, you don’t unload it. You just leave it sat on board the ship where, technically, it’s not passed customs – so is not actually ‘in the country’ – and wait for the price concession to kick in.
“As soon as it does, you immediately ring round the wholesalers and offer it at 10 times the normal price. They in turn offer it to the poor old chemists at 10 times your inflated price, and the good old NHS ends up paying £50 for something that last month was 50p.”
Surely this is unethical, I ask him. A quizzical look comes over his face that says he doesn’t understand the question.
“Just because you’re a health professional, old boy, you seem to think that everyone has to play by your rules. There’s no code of ethics governing business, so you do what is either legal, or close enough to legal that challenging it is impractical.
“The trick is to keep the profit just below the level at which it’s worth diverting the government’s attention – which is a pretty high level while there’s Brexit rattling along. You chemists made that mistake a few years ago with your deals on specials, when you got too greedy and made it worth the Department of Health introducing part VIIIB of the drug tariff.”
I go back to my pharmacy and look at the ever-increasing pile of owing scripts and lengthening list of price concessions. “Don’t worry,” I tell my patients. “The concession price of your quetiapine has just exceeded £100, and I think I can hear the phone ringing with a wholesaler announcing they’ve just received stock.”