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Published on 12 December 2007

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Drug deals spark cost rise concerns

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The NHS may have to pay out more than £500m extra each year for branded prescription drugs because of exclusive deals being struck by manufacturers, a report claims.

The health service currently spends £6bn every year on the medicines, but could be forced to pay more if the deals between manufacturers and distributors become widespread, the Office of Fair Trading warned.

And patients may face delays for the medicines, the watchdog added.

The warning comes after an OFT study of an exclusive “direct to pharmacy” deal between US manufacturer Pfizer – maker of drugs such as Viagra (sildenafil citrate) – with wholesaler UniChem, now part of Alliance Boots.

Up until now, drugmakers supplied medications to wholesalers at a discount, with the wholesalers then competing to supply pharmacies, but under the new deals manufacturers set the prices paid by the pharmacies who then pay wholesalers a fee for their services – with no discount for the pharmacist.

The arrangements have led to fears over higher costs – and higher profits for the drug firms – as well as reduced distribution of medicines through fewer wholesalers, which may mean longer waiting times for patients.

Copyright © PA Business 2007

The Office Of Fair Trading



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