The Pharmaceutical Journal
Vol 277 No 7430 p679
9 December 2006

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News summary

Pfizer discounts acceptable to England and Wales

Details of Pfizer's pharmacy discount scheme, which will come into effect on 5 March 2007 when the company begins its direct-to-pharmacy distribution arrangements, have been announced.

The discount scheme is value based and will range from 8.5 per cent to 11.5 per cent. There is no minimum order value and no minimum order quantity required to earn discount (see Panel right). Products not eligible for discount are those that are already zero discounted and two hospital-only lines.

Initial reaction to the scheme has been mixed. The Pharmaceutical Services Negotiating Committee is satisfied that Pfizer has set purchase terms that will not be detrimental to contractors in England and Wales. The National Pharmacy Association is also encouraged by Pfizer’s announcement. However, the Scottish Pharmaceutical General Council is unhappy with the discount scheme. A spokesman told The Journal that Pfizer had not consulted the SPGC before setting its discount scale and had failed to recognise that discount recovery works differently in Scotland, where there are separate discount rates for proprietary and generic purchases. “To say that we are displeased is putting it mildly,” the spokesman said.

All three organisations remain concerned about the revised distribution arrangements for Pfizer products.

David Watson, Pfizer’s head of trade, said the discount terms demonstrated that the company’s new distribution arrangements were not a cost-cutting exercise.

“We decided to publish details of the discount scheme rather than go to individual chains and tell them what their discount is,” he said However, he revealed that Pfizer would continue to negotiate different discounts for different buying groups in future. “But, in general, our approach will be on a business-by-business basis.”

Like the SPGC, the NPA is concerned about how the discount terms will affect contractors in Scotland. In a statement it said: “[Pfizer’s] approach appears to be consistent with the principles of fair funding associated with the new contract in England … However, we are concerned about the impact on NPA members in Scotland, where the average level of discount is higher. We would expect that the new Pfizer discount arrangements will be factored in to the UK discount/invoicing inquiries.”

Mr Watson said: “It would be difficult to justify why pharmacists in one part of the country would get a different discount to pharmacists in another part of the country. But we recognise that clawback will be different.”

He added that it was difficult for any company to match clawback or to follow it. “It is a better tool if used the other way around. The key driver for the [Government] is to have clarity on where the money is going. If as a result they need to adjust clawback up or down that is up to them.”

In its response to Pfizer’s announcement, the PSNC said that the new purchase terms would be taken into account when calculating contract funding for 2007–08.

Both the NPA and PSNC drew attention to an assessment carried out by logistics consultants on Pfizer’s behalf, which indicates that the consultants are satisfied that Pfizer and UniChem will be able to maintain existing service levels under the new arrangements.