OFT sets out plan to limit impact of supply changes

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The Pharmaceutical Journal
Vol 279 No 7482 p667
15 December 2007

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OFT sets out plan to limit impact of supply changes

Rex Features

Office of Fair Trading

The OFT recommends that pharmacy discounts should be safeguarded

Recommendations to limit the impact of direct-to-pharmacy (DTP) distribution deals on the NHS drugs bill and service levels to pharmacies have been made to the Government by the Office of Fair Trading this week.

In its much anticipated report on UK medicines distribution, the OFT has recommended that the Department of Health incorporates as part of its changes to the Pharmaceutical Price Regulation Scheme mechanisms to safeguard the discounts that pharmacists currently receive.

“Because of its obligation to protect pharmacy income levels and to ensure that the distribution changes do not result in increased medicines costs, the DoH is effectively required to ensure that the discount obtained by pharmacies under DTP is comparable to that received under the traditional wholesale model,” the report states.

UniChem IT failure

UniChem’s computer systems failed on Tuesday afternoon (11 December) — the same day the OFT published its report. A spokeswoman explained that a power failure at the company hosting its mainframe meant that some customer orders, including those for Pfizer products, could not be accessed and delivered the following morning.

The system was back up and running by midday on Wednesday. The UniChem spokeswoman said that emergency requests for medicines were delivered to pharmacies on Wednesday morning with the rest of the orders expected to be delivered that afternoon.

Pfizer and UniChem’s exclusive distribution deal did not escape criticism by the OFT, but the companies have much to be positive about — the OFT did not recommend changes to their or any other companies’ new arrangements and no referrals were made on competition grounds.

“UniChem is very pleased … the OFT has recognised that there are no grounds for interference with the Pfizer distribution agreement under competition legislation,” the wholesaler said.

The Association of the British Pharmaceutical Industry responded: “The choice of distribution arrangements by companies is a matter for their commercial judgement, providing that patient safety, supply chain security, speed of service to pharmacists and general efficiency are maintained.”

However, the OFT did warn that it might step in if exclusive distribution deals become more prevalent. The OFT has recommended that the Government seek an agreement from manufacturers to adhere to appropriate levels of services.

The OFT believes that the Government, as part of the PPRS framework, should expect a certain level of service from manufacturers as part of the negotiated prices for their medicines. If lower service levels to pharmacies are agreed, the OFT suggests, the cost of medicines to the NHS should reflect this.

Hemant Patel, President of the Royal Pharmaceutical Society, said that the Society wanted assurances from the DoH that it would put the necessary procedures in place to ensure that DTP schemes do not limit pharmacists’ ability to provide medicines to patients in a timely and efficient manner.

Company Chemists’ Association chief executive Rob Darracott said: “Capping prices and seeking assurances about delivery may be short-term fixes, but in the long term, we need a joined-up medicines pricing and reimbursement system that ensures a fair reward for all those involved.”

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