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The Office of Fair Trading (OFT) is to investigate the exclusive distribution deal signed by US pharmaceutical giant Pfizer and Alliance Boots' European distributing arm.

Agreed last month, the tie-up will see Pfizer, the maker of Viagra, sell prescription drugs solely through Unichem.

But the OFT probe, due to report back by the end of 2007, will determine whether the deal goes against the interests of industry competitiveness.

The investigation comes as other leading pharmaceutical firms consider whether to create similar arrangements.

"The decision to undertake a market study reflects the importance of ensuring that the distribution of medicines involving pharmacists, hospitals and dispensing doctors, is timely, efficiently delivered and cost effective for patients," the OFT said.

"The NHS spends more than £10 billion per year on the purchase of prescription medicines. UK pharmacies currently provide more than 800 million prescriptions per year."

Ann Pope, the watchdog's director in markets and projects, explained that the investigation was an "important market study in one of the OFT's priority sectors".

"Recent changes in the distribution arrangements for some medicines have caused great concern to many in the market. It is important for us to understand the likely impact of these changes on patients and costs to the NHS," she elaborated.

In response, Alliance Boots said the OFT's study "does not effect the operation of the group's direct to pharmacy distribution arrangements with Pfizer".