The UK government has rejected calls by the Office of Fair Trading to take action to ensure that direct-to-pharmacy drug supply agreements do not result in lower standards of service being provided to pharmacies and, subsequently, to patients, than through the traditional wholesale model.

Having consulted with industry, the government concludes that there has been no real change in the standard of service offered to patients since the first DTP distribution schemes were set up, and there is no evidence to suggest that this will be the case in the foreseeable future, says the Department for Business Enterprise and Regulatory Reform, which is leading the government response to the OFT report on pharmaceutical distribution, published last December. Therefore, the government “is unconvinced of the need to bring forward legislation to clarify service standards at this stage,” it adds.

BERR does, however, agree that the market watchdog agency’s recommendations should be discussed as part of the current Pharmaceutical Price Regulation Scheme negotiations and with other representative bodies of pharmaceutical wholesalers and pharmacy contractors.

Commentaries on the ongoing PPRS renegotiations report that the government is seeking to cut the National Health Service drugs bill by at least 10% through reductions in the prices of patented drugs, but the industry’s response has been to offer a reduction of under 3%.

The OFT report had warned of the “significant risk” that DTP arrangements, such as the scheme operated by Pfizer using UniChem as its sole distributor, will result in higher costs to the NHS “potentially running into hundreds of millions of pounds.” DTC could also affect services to pharmacies and patients, with for example longer waiting times to receive medicines, it added.

The OFT (which, in another report in February 2007 called on the government to reform the PPRS, describing it as “no longer fit for purpose”) urges ministers to make further changes to the Scheme to ensure that NHS medicines did not increase as a result of changes in distribution. If the government is concerned about reductions in service standards to pharmacies, it should seek the agreement of manufacturers to adopt minimum service standards, and also ensure that it pays less if service standards are reduced, it added.

Partial and simplistic response, BAPW
While the government has not accepted the OFT’s main recommendations, BERR says it does welcome the report as “useful” and “timely.” However, the British Association of Pharmaceutical Wholesalers, which represents the full-line pharmaceutical wholesalers, described the report as “partial and simplistic,” pointing out for example that while it suggests a “voluntary agreement,” policed by the Department of Health to ensure that appropriate service levels to pharmacies are maintained, it provides no analysis of what would be “appropriate.”

BAPW does however welcome the opportunity to become formally involved in the PPRS negotiations; the DoH says it intends to consult with the trade association on any new arrangements this year. “We would hope that a formal distribution margin will be established, recognising the value of full-line wholesaling to the safe distribution of medicines in the UK,” said BAPW executive director Martin Sawer, commenting to PharmaTimes UK News Online.

BAPW agrees with the OFT that the DTP model has the potential to remove “competition from the wholesale layer of the supply chain,” said Mr Sawer, adding: “Moreover, we believe that competition needs to be maintained within the wholesale sector to ensure that services to pharmacy are delivered as the OFT and DH both recommend.”

BAPW is concerned that DTC could potentially put universal access to all medicines at risk, and that costs to pharmacy could be increased if pharmacy purchase volumes are not achieved and wholesaler services to pharmacy are reduced. However, the group also acknowledges that the existing arrangements are now “bust,” and that any new structure can only use the PPRS for implementation in the short term.

- Pfizer launched its exclusive DTP scheme with UniChem in March 2007. Since then, AstraZeneca and Sanofi-Aventis have launched their own schemes.