The Pharmaceutical Journal Vol 267 No 7161 p235-236 18 August 2001	This article Reprint Photocopy
		PDF file (40K) Acrobat Reader

Articles

Managing medicines better — smarter purchasing and distribution

By The Adam Smith Institute

The Adam Smith Institute, one of the United Kingdom’s leading public policy think-tanks, is engaged in a major project to develop a blueprint for reform of health care in the UK. The goal is to move from monopoly to pluralism in the provision and funding of health care, delivering substantial improvements in health outcomes from a given resource and from the patients’ perspective. The better management of medicines has been central to a wide-ranging series of discussions and consultations. Last week, proposals for enhancing the role of the community pharmacist were outlined. In this second article Matthew Young, director of projects, Adam Smith Institute, outlines the prospects for further improvements in patient services and additional cost savings that can be achieved through smarter purchasing and distribution

Last week’s article (PJ, 11 August) emphasised the crucial importance of placing medicines management with the expert — the pharmacist — and removing prescribing duties from general practitioners. The benefits in improved patient care and the billions of pounds better spent on the pharmacy budget demanded change. This week, we take a look at purchasing and distribution and conclude that, again, substantial improvements in patient care and additional savings are available. The route to change? Electronic technology and the new opportunities it will make possible. The impact? Electronic technology and the internet will in large measure determine the future of pharmacy services. Where should we begin and how far can we go? The electronic pharmacy At a basic level we know it is possible for prescriptions to be written electronically by the GP, and transmitted electronically to the pharmacist to be dispensed. At the same time the information can pass electronically to the Prescription Pricing Authority in order to facilitate the process on which the reimbursement of pharmacists is based. This joined-up communications network will increase transparency and help to eliminate error and fraud, and speed the service to the patient. The business case and cost-justification is persuasive and the Government has set a modest deadline for electronic prescriptions by 2004 and electronic transmission to the PPA by 2008. But we should move faster and go much further. For the patient, the benefits of speed and convenience will emerge more clearly when they are able to receive their prescriptions electronically and have their medicines dispensed from a distance, in much the same way as consumers can now receive any variety of goods by ordering over the internet. Medicine through the mail In the United States, a significant volume of dispensing of medicines for chronically sick patients takes place in organisations that provide medicines by post. These organisations are highly efficient and provide high quality services. They are staffed by pharmacists. The benefits are substantial: Accuracy — high throughput of prescriptions permits automation that in turn reduces human error. Discounts — choice of supplier and purchasing power allows them to negotiate significant discounts, as much as 75 per cent, on all forms of medication, ranging from branded to generic drugs. Customer service — excellent back-up and follow-up information services for patients ensure timely visits to doctors for repeat prescriptions and treatment re-evaluation. Delivery can be direct to the patient or to primary care or to high street pharmacies. They can also dispense out of hours and provide a 24-hour advice service. The evidence is there: using direct mail, and with the service levels that can be built around that by a new breed of pharmacy benefit managers, the patient will receive better treatment and better follow-up, all at a far lower price. It is high time that direct mail dispensing was introduced into the National Health Service along the lines of that available to US patients. If legislation is needed it deserves to be a priority. The European Union may resist, but there is a degree of inevitability here and thus an expectation that the whole of the EU will eventually come into line with US or UK practice. Impacts of direct mail dispensing The savings, primarily through purchasing efficiencies, are hard to estimate but are expected to be considerable, certainly more than 10 per cent of the £7bn NHS prescription drugs bill and, if pursued with real vigour, perhaps 15 to 20 per cent. And given the UK’s relatively modest spend on pharmaceuticals, our northern European neighbours are likely to gain much more. This raises fair and square the sustainability of separate pricing systems in Europe. The reality is that they will not survive such an onslaught, and it is possible that a pan-EU pricing system could result from the direct mail initiative. Whither the pharmaceutical companies’ margins and the Pharmaceutical Price Regulation Scheme? Will the price of prescription medicines shift from being set by the state to set by the market? And what future for our over-strict regulatory framework? The more immediate impact will be on the high street pharmacy. A further diminution in its current, increasingly modest role of checking and dispensing prescriptions is a certainty, as is a reduction in the number of traditional high street pharmacy premises. The business interests likely to drive these opportunities will be the major chain pharmacies with the financial and management resource to re-engineer the process, and the growing band of large-scale fulfilment specialists. Internet-based links between patients and pharmacy benefit managers will be likely to include “disease awareness” slots, promoting a better-informed patient and only a step away from direct-to-consumer advertising. With these benefits and the underlying commercial drivers, what stands in the way? Legal impediments There is some uncertainty as to the legal status of direct mail pharmacy in the UK and in Europe. The conventional argument is that patient safety requires that medicines are dispensed by a pharmacist or under the control of the pharmacist — which is taken to mean that the pharmacist, or his associate under his supervision, must physically hand over the medicine to the patient or the patient’s carer. European pharmacists argue that direct mail provision undermines this essential component of the dispensing process. The Government’s view is understood to be more encouraging. So long as normal ethical and legal standards are met, there is no reason why online pharmacies should not be safe and provide patients with new choices when obtaining their prescriptions. Standards and automation The automation of dispensing will be helped by having standards surrounding pack size and product identifier to enable a consistent interface with patient medication and dispensary management systems. Specifically: A unique product identifier will enable the transition from the prescribed product to the dispensed product, which will facilitate the e-prescription dispensing and payment process. This will reduce the margin of error, not only in payment but also dispensing, and reduce costs in processing pharmacy payments by allowing pharmacy contractors to calculate and invoice for payment. Barcodes containing unique product descriptions, with accompanying batch number and expiry date information, will simplify product recalls and allow recall at patient rather than national level. Pack size standards defined by standard treatment periods for specific products will reduce wastage by patients and split pack claims by pharmacy. The purchasing power of the major entrants to this market, combined with the inexorable pressures for excellence in service delivery, will set new standards in the quality of packaging and patient-centred information and, at long last, align pack size with prescriptions. Pricing prescription medicines Bulk purchasing deals will deliver important savings but if purchasing does become pan-European it will also throw a spanner in the works of the hugely complex patchwork of pricing and regulatory systems that exist in each EU member state. Currently, the same medicine is made available at significantly different prices and the variance can be a much as 30 per cent. These differences amount to considerable sums when medicines for the on-going treatment of chronic illnesses are considered. In the short term this will create the opportunity for inter-state trade, where the provider of the pharmaceutical products purchases from the lowest price member state and provides to those states where the prices are high. Thus pan-European purchasing might indeed produce short-run savings of the order of 15 to 20 per cent for the UK NHS. This, in turn, takes us in the direction of pan-EU pharmaceutical direct mail operations, drawing customers from all member states and billing to the national health care provider. It would ensure the minimisation of prices of drugs available to any one national health service, and act as a catalyst to make the pricing of pharmaceuticals more uniform throughout the EU. Moreover, the provision of direct mail dispensing services across EU state frontiers would be compatible with the principle of the free movement of goods. A timetable for change The starting point is probably the direct mail dispensing of long-term drug treatments. If it is right that there are no legal impediments, the commercial entrants to this market — the pharmacy benefit managers — could be under way within two years. The more the treatment is diverted through the direct mail route, the greater the negotiating power of the PBM with the manufacturer. In parallel, the automation of the prescribing process could start straightaway with local primary care/pharmacy internet links, since the technology exists and much of it is already installed, at least in GPs’ premises. In conclusion Better management of the NHS drugs bill and the introduction of novel delivery systems, such as direct mail, provides a win-win situation for all. There will be better patient care and better value for money, allowing more medicines to be consumed and new medicines to be rapidly taken up because the funding will be available. The best treatments will be available at the most affordable cost. Higher volumes in medicines consumption may alleviate the pharmaceutical industry’s discomfort over squeezed margins. The concepts explored here are not new. They build on existing trends. The need for better management of NHS medicines is apparent to all the professionals involved. What is needed now is not some centrally driven, politicised, multi-objective initiative, but an encouraging signal to the commercial players to develop detailed propositions.

ACKNOWLEDGEMENTS The Adam Smith Institute is immensely grateful for the support and advice it has received from pharmacists and pharmaceutical companies, academics and policymakers.

The views expressed in this article are those of the Adam Smith Institute and do not necessarily represent those of The Pharmaceutical Journal or of the Royal Pharmaceutical Society

Back to Top

Home | Journals | News | Notice-board | Search | Jobs  Classifieds | Site Map | Contact us

©The Pharmaceutical Journal