The Pharmaceutical Journal
Vol 269 No 7216 p383
21 September 2002

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Vets and manufacturers run monopoly over medicines, says competition body

A complex monopoly exists in the supply of prescription medicines to animal owners and in the supply of dog and cat vaccines to veterinary surgeries, the Competition Commission has provisionally concluded. This is in addition to its finding that a scale monopoly exists (PJ, 4 May, p601).

Before it decides whether the monopolies are against the public interest, the commission has sent a statement of its views to the manufacturers and wholesalers of prescription veterinary medicines and to all veterinary surgeons in the United Kingdom. The statement includes a set of possible remedies of the situation and invites comment on their likely effectiveness, cost and practicability.

The complex monopoly exists because veterinary surgeons fail to tell clients that they can ask for prescriptions, discourage requests for prescriptions, refuse to provide prescriptions and charge excessive prices for prescriptions. They also fail to itemise bills or tell clients how much medicines will cost. In addition, they do not charge prices for medicines that reflect the actual acquisition costs of the drugs. Manufacturers and wholesalers contribute to the complex monopoly by refusing to negotiate discounts with veterinary buying groups. They operate rebate schemes which make it difficult for vets to work out how much drugs cost and refuse to supply medicines to pharmacies or else sell them on terms that hinder price competition.

Possible remedies that the commission is considering range from requiring vets to issue prescriptions free of charge to simply telling clients that prescriptions can be provided for a set fee. They could also be required to display price lists for commonly prescribed animal medicines. Manufacturers could be required to supply medicines to pharmacies on competitive terms.

The Competition Commission has also concluded that the regulatory system for animal medicines appears to restrict competition more than necessary, to the extent that parallel trading in identical medicines is prohibited. The legal classification system for animal medicines comes in for criticism by the commission, which says that it might recommend that manufacturers should not be allowed a say in legal classification decisions and that classification should be regularly reviewed by the Veterinary Medicines Directorate regardless of whether manufacturers have asked for such a review.

The commission’s statement can be found here (PDF 240K) and is open to comment until 4 October. A final report from the commission will be submitted to the Secretary of State for Trade and Industry on 8 January 2003.