The Pharmaceutical Journal
Vol 268 No 7194 p543
20 April 2002

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  Supervision
  Checking technicians
  Drug-herb interactions
  NHS
  Community pharmacy
  Hospital pharmacy
  Prison pharmacy
  The Profession
  Wholesaling
  CPD
  Pharmacy practice
  Dispensing
  The Society

Letters to the Editor

Wholesaling

An attack on commercial freedom

From Mr D. Macarthur, MRPharmS

British Association of Pharmaceutical Wholesalers chairman Stephen Simms was right to highlight the growing trend by multinational manufacturers to apply fixed quotas to supplies of some or all of their products to wholesalers when he spoke at the BAPW dinner (PJ, 6 April, p453). Under the guise of "supply chain management", this is merely another attempt to stifle parallel trade.

As well as being illegal under European Union competition law, quotas — which are sometimes announced to long-standing customers with just a few weeks' notice and without any explanation as to their basis or as to how, when and if they may be subsequently revised — are a direct attack on the commercial freedom of wholesalers. New pharmacy accounts cannot be sought, expansionist plans have to be put on hold, promotions cannot be run, and even existing accounts may not be fully serviced in the event of a sudden surge in demand. Shortages inevitably occur, with consequent risks to patient health and extra demands placed on doctors and pharmacists.

Also speaking at the dinner, pharmacist Mike McConnell said that manufacturers have difficulty making up for a sudden fall in parallel trade usage as more packs in UK livery have to be supplied. He did not mention that in many cases these UK packs are made in the same overseas plants that supply the rest of Europe, and that shortages in the countries that supply parallel trade are directly engineered through quotas by the head offices of these same manufacturers.

In the UK, as in every other European country that enjoys incoming parallel trade, there are clear savings for the health care system and the public. The National Health Service gains in two ways. First, there is the discount clawback. New drugs also have virtually complete pricing freedom here, and with parallel trade providing the only form of price competition possible with patent-protected products, there are also significant dynamic effects. Together, both types of savings amount to hundreds of millions of pounds annually, with no sacrifice in product quality, and no measurable impact on the ability of industry to invest in research and development or to meet its profit expectations.

Runaway drug cost inflation is a constant threat to the NHS. Without parallel trade, some other cost containment tool, inevitably a more interventionist and market-distorting one, would have to introduced. Is this what industry wants? Is it not time for it to stick at what it does best — the discovery, development and commercialisation of new cures — and stop interfering with the distribution chain for no other motive than profit?

Donald Macarthur
Secretary General
European Association of Euro-Pharmaceutical Companies

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