OFT decides to scrutinise UK medicines distribution
Distribution of medicines in the UK and, in particular, the direct-to-pharmacy model being increasingly pursued by manufacturers will be scrutinised by the Office of Fair Trading, the consumer watchdog announced last week.
The OFT said last
year (PJ, 28 October 2006, p507) that it was looking
into whether to investigate the fairness of Pfizer’s then-proposed
exclusive distribution deal with UniChem after it received a series of
complaints, but no decision had been made by the time Pfizer’s
scheme went live on 5 March.
Rather than launching a full investigation into the Pfizer/UniChem arrangement,
the OFT has opted to undertake a “market study” looking at
the overall effects of recent and proposed changes on medicines distribution
(see Panel below). The OFT says that a short market study will enable
it to ensure that any concerns it identifies are tackled effectively
and
proportionately.
OFT short market study
The OFT says it intends to examine:
• Motivation for the direct-to-pharmacy model and its impact
on competition and choice in wholesaling
• Motivation for exclusive arrangements and their long-term impact
on competition
• Incentives created by sector-specific regulations
• Potential impact of the different distribution models on the
appropriation of the discounts secured by pharmacies and the
NHS, and service levels provided to patients
The OFT will consider how changes in the pharmaceutical distribution
market are influenced by sector specific regulations, parallel
trade and counterfeit products. The office has identified several
possible outcomes of the study:
• Giving the sector a clean bill of health
• Making a referral to the Competition Commission
• Undertaking a full investigation under the Competition Act
• Making recommendations to the Government
The OFT invites submissions relevant to the study
by 1 June 2007; further information is available from the OFT
website |
The
National Pharmacy Association said it was pleased that the study will
use patient care as its prime focus.
Colette McCreedy, director of pharmacy practice at the NPA, commented: “It’s
important that the impact of Pfizer’s decision, and the domino
effect if other manufacturers follow suit, is looked at in the context
of the ‘fair funding’ principle for NHS pharmacy services.
If left unchecked, this coupled with the impact on timely supply of medicines
to pharmacies could have a detrimental effect on patient care.”
Pfizer reacted to the news: “Pfizer is pleased to note that the
OFT has not launched a formal investigation into Pfizer’s medicine
supply and distribution arrangement at this time and we will continue
to sell our medicines directly to pharmacy customers using UniChem as
our logistics service provider.” The manufacturer said that it
would co-operate fully with the OFT.
British Association of Pharmaceutical Wholesalers executive director
Martin Sawer reiterated the BAPW’s concerns that new distribution
arrangements “could damage the robustness of the pharmaceutical
supply chain and the ability of patients to receive medicines quickly
and easily, with the potential for hidden costs to the NHS”.
He declared: “Now is the time for the pharmacy sector to come together
to explain clearly the effects of these new arrangements on their services
and their patients.”
In support of the OFT study, Scottish Pharmaceutical General Council
chief executive officer Harry McQuillan said: “SPGC has argued
from the beginning that any move to single channel distribution through
one wholesaler would have a detrimental impact on the stability of the
current distribution network and the delivery of pharmaceutical care
to patients. It is vital that the likely impact of such fundamental changes
on Scotland’s patients, the distribution network and the NHS in
Scotland is fully understood”.
Mark Stephenson, supplier relations director, UniChem, told The Journal that
he welcomed “the clarity that a market study will bring”.
However, Sue Sharpe, chief executive at the Pharmaceutical Services Negotiating
Committee, pointed out that the OFT market study would not resolve any
immediate problems. “[It] will not be completed until the end of
the year, and any action resulting from the study would not be expected
for several months after that,” she said. “Changes in distribution
arrangements that have been implemented by Pfizer will continue, and
other manufacturers may well proceed with their plans to introduce new
systems for supplying the market.”
Mrs Sharpe added: “There is already concern about growing numbers
of medicines that cannot be purchased by pharmacies at or below the net
reimbursement price, and although the funding arrangements ensure that,
overall, pharmacies secure the agreed levels of purchase profits, for
individual pharmacies this can be
damaging.” |
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