OFT says Drug Tariff may impede competition
Competition may be impeded by the Drug Tariff, the Office of Fair Trading says.
Section IX of the Drug Tariff (appliances) has been used by the OFT as
one of a number of a case studies in a review of the impact of public
sector procurement policies on competition. The review says that the
tariff is likely to affect competition in three ways: restricting price
competition, hindering the acceptance of new products and distorting
distribution patterns.
Price competition could be reduced, the OFT says, because there is no
competitive tendering process for the inclusion of products in the tariff.
Further, once they are listed, products are prescribed according to individual
clinical need rather than price.
Acceptance of new products is hindered, it says, because it is easier
for similar products to get a listing after an innovative product has
been put on the tariff than it is for the original product to be accepted
in the first place. The report gives as an example a coated catheter
that took six years to be included, yet a second near-identical product
took only six months.
The OFT adds that distribution may be distorted because the different
remuneration systems for pharmacy and appliance contractors give appliance
contractors a financial
advantage.
The OFT is currently considering, in the light of other procurement reviews,
what its next steps should be. It will discuss the reviews with other
Government departments, and with the Treasury-based Office of Government
Commerce in particular, before deciding what action, if any, it should
take. The OFT expects to announce its decision early next year. |
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