MPs have been told that the interests of the taxpayer are protected by the competitive market and the diligent purchasing of medicines by dispensers.
In a debate on dispensing, pharmacy representative Mark Burdon said “… diligent purchasing is what drives the price down over an extended period of time. In the long term the competitive market …. largely does work, to protect the interests of the taxpayer.”
However, he also pointed out the risk of the community pharmacy business model, which also applies to dispensing GPs. He said: “Pharmacists have a duty to supply, which means that they cannot turn away prescriptions. However, pharmacists are dispensing medicines often not knowing the price that they will be reimbursed for that medicine.“
The debate, which was hosted by parliamentary scrutineer the Public Accounts Committee (PAC), follows a report by the National Audit Office investigation into NHS spending on generic medicines in primary care .
In written evidence to the PAC, pharmacy negotiator the Pharmceutical Services Negotiating Committee makes the following points:
The Department of Health and Social Care (DHSC) has struggled to determine the reasons behind generics price increases. This is a complex market, and many factors are likely to have contributed to the problems
- One underlying problem may be the sheer efficiency of the generics purchasing market in the UK. The UK now has some of the lowest generics prices in the world. While this has a clear advantage for the NHS, it also means that there is little scope to absorb any short-term problems that escalate costs in the market
- The new regulations on information disclosure on healthcare products will greatly increase the transparency of the marketplace (for DHSC) and thus improve its ability to manage supply effectively. It will also allow it to get data from the supply chain very quickly, which should improve its ability to set reimbursement prices for shortage lines
- Contractors should not be the victims of adverse events or activity further up the supply chain
- Any pricing system must balance fairly contractors’ duty to supply with a reasonable purchase risk
- Any data used to set prices must relate to the period for which a concession is given
- Fair distribution of margin is required for pharmacy funding to work properly.
In the PAC debate, a top generics manufacturer representative also explained how generic manufacturers decide the influences on drug manufacturing, including product mix. Warwick Smith, director general of the British Generics Manufacturers Association, also told the PAC that there was no defence for generics companies involved in ‘price gouging’ or the act of putting prices up for no good reason.
Commenting on the new The Health Service Products (Provision and Disclosure of Information) Regulations 2018, Mr Smith said: “The bottom line comes down essentially to two facts. Overall, we have the most competitive market in Europe and the lowest prices. For outliers, we needed better systems to deal with them.
“What we have now… is the ability for the Department to get better information and interrogate individual product prices more readily and effectively than they have done before without automatically going to the backstop of the Competition and Markets Authority. I think that is very important.”