Wholesalers in the UK have welcomed the announcement that the Office of Fair Trading is to look into the way that medicines are distributed in the country a month after Pfizer began selling its products through a single provider.
The OFT has launched a ‘market study’ into the distribution of medicines in the UK in order to determine “how recent and proposed changes to distribution arrangements may affect competition, the NHS and patients.” It spoke of the importance of the distribution of medicines to the UK economy and to patients, saying “it is one of the OFT’s priority sectors,” given that sales of medicines to the NHS are worth over £10 billion a year.
However the catalyst behind this move, acknowledges the OFT, is that “the pharmaceutical wholesaling sector is undergoing significant change, the competition implications of which are unclear”. This refers to Pfizer’s exclusive supply deal with Alliance Boots unit UniChem, which the government watchdog says “represents a fundamental change to the workings of this sector and has prompted widespread concern among pharmacists, dispensing doctors and competing wholesalers.” Other firms, Novartis being the latest, are also considering similar changes to their distribution arrangements.
The situation has led to a host of complaints from wholesalers and eight of them went to the High Court to seek an injunction that would stop Pfizer’s plan. Their bid failed and there was some disappointment among the firms involved that little had been done on a governmental level to look at the validity of the deal. PharmaTimes World News asked the OFT why the market study was being launched now, especially given that complaints about the Pfizer/UniChem had been made as early as last November, and a spokeswoman said that it takes time “for us to do a full investigation of the market to see whether there are any breaches of competition law.” So far, the aforementioned deal “doesn’t appear to raise any serious competition concerns – although the market study will give us a better idea of this.”
Once the report is concluded, before the end of the year, the OFT has a number of options, which include giving the market “a clean bill of health” right up to making recommendations to the Government or sector regulators, as well as “investigation and enforcement action against companies suspected of breaching consumer or competition law.” Its powers are considerable but Pfizer seems unfazed at the moment.
A spokesperson said that the company is pleased to note that the OFT “has not launched a formal investigation into Pfizer’s medicine supply and distribution” and it will cooperate fully with the general market study. UniChem added that it too is keen to help, and stated that “it is pleased to report that it has maintained service levels in excess of 99% following the launch of the new distribution model in March 2007.”
A timely move
The British Association of Pharmaceutical Wholesalers welcomed the “timely decision” to launch the study and executive director Martin Sawer said that his members “are pleased that the OFT is taking the public interest implications of recent actions of global pharmaceutical companies, and the motivations behind it, seriously. 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. “
He added that the BAPW has been arguing that the introduction of new and varied 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. “The OFT has listened to our concerns and it is now up to the Department of Health, together with all the supply chain partners, to look at the public health consequences on our reliable and world-class distribution system,” he concluded. By Kevin Grogan
