OFT warning on medicine deals

11-12-2007

OFT warning on medicine deals
The Office of Fair Trading (OFT) has warned new drug distribution arrangements planned by pharmaceutical firms could lead to higher costs for the NHS.

Britain's trading watchdog warned the higher cost to the health service of the new method of distributing medicines to chemists could run into "hundreds of millions of pounds".

An investigation into the new arrangements, known as direct to pharmacy (DTP) schemes, was launched by the OFT after pharmacy giant Pfizer began selling its prescription drugs through just one medical wholesaler, UniChem.

In a report today the OFT said several other drug manufacturers had also implemented, or could soon introduce, similar arrangements and warned there was an "emerging trend" among many pharmaceutical firms to reduce the number of wholesalers used in the distribution of their branded products.

The watchdog, which said DTP schemes allowed manufacturers to increase the prices paid by pharmacies for their drugs, said the government should make changes to existing regulations to ensure the cost of NHS medicines did not increase as a result of the new distribution arrangements.

In addition, the OFT expressed concern patients and pharmacies could face longer waiting times to receive medicines following the adoption of DTP schemes and a reduction in the number of distributors drug manufacturers use for their products.

Ministers have subsequently been urged to press pharmaceutical firms to adopt minimum service standards in regard to the distribution of drugs.

The OFT also stressed any widespread use of exclusive distribution arrangements for medicines could lead to long-term competition concerns, indicating it would monitor the situation and launch a future investigation if appropriate.

"The changes to the distribution of medicines in the UK are among the most significant for many years and have given rise to real concerns," said OFT chief executive, John Fingleton.

"Our recommendations give manufacturers the freedom to use the distribution models that suit them, while ensuring protection for patients and the NHS."

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