APPENDIX 11
Memorandum by the NHS Confederation (GD
14)
EXECUTIVE SUMMARY
The NHS Confederation has prepared this paper
for the select committee on availability of generic drugs to the
NHS as evidence highlighting the impact of the current shortage
of generic drugs on primary and secondary care sectors.
The NHS Confederation is the membership body
for NHS organisations, representing over 95 per cent of NHS Trusts,
health authorities, health boards and health and social services
boards, and including Primary Care Groups as affiliate members.
The paper highlights five key areas of concern
related to the current shortage of generic drugs:
— Availability—shortages of some
generic drugs at dispensing pharmacies.
— Category D drugs—a rise in
the number of products in this category, resulting in the dispensing
of more expensive drugs than those prescribed.
— Price increases—of certain
key generic drugs.
— Packaging changes—the shift
from bulk to patient packs.
— Budgetary impact—including
delays in health authority (HA) and primary care group (PCG) receipt
of prescribing analysis and costs (PACT) data from the Prescription
Pricing Authority (PPA).
The NHS Confederation is principally concerned
with the impact of these shortages, and consequent price rises,
on the development of PCGs.
— that the remit of the Medicines Controls
Agency (MCA) be extended to cover maintenance of supply to market.
Such a remit might include the necessity for manufacturers to
submit their plans on how to ensure supply in circumstances of
major retooling, relocation, withdrawal from markets, etc;
— lower the stock threshold for category
D dispensing to less than four weeks;
— a thorough investigation into pricing
of generic drugs, including the role of wholesalers as well as
manufacturers;
— improvement in the dialogue between
the industry and the Department of Health. This will allow the
Department to seek reassurance or detailed plans on changes affecting
supply to market;
— discussion is also needed as to the
availability to hosptials and pharmacies of bulk packs of commonly
used drugs;
— the NHS Confederation strongly believes
that some mechanism for alleviating the impact of price rises
on PCG budgets is needed.
1. INTRODUCTION
1.1 The NHS Confederation has prepared this
evidence for the select committee on availability of generic drugs
to the NHS.
1.2 The NHS Confederation is the membership
body for NHS organisations, representing over 95 per cent of NHS
Trusts, health authorities, health boards and health and social
services boards, and including Primary Care Groups as affiliate
members.
2. THE ISSUES
2.1 The alarm was raised by the increasing
number of drugs appearing in category D and the likely impact
of this on drug budgets in primary care. As more information has
come to light we can identify five issues. Despite strong overlap
it is useful to separate these as an aid to understanding:
(1) Availability—shortages
of some generic drugs at dispensing pharmacies;
(2) Category D drugs—a rise
in the number of products in this category, resulting in the dispensing
of more expensive drugs than those prescribed;
(3) Price increases—of certain
key generic drugs;
(4) Packaging changes—the shift
from bulk to patient packs; and
(5) Budgetary impact—including
delays in health authority (HA) and primary care group (PCG) receipt
of prescribing analysis and costs (PACT) data from the Prescription
Pricing Authority (PPA).
2.2 This issue is affecting secondary and
primary care in different ways. This paper looks separately at
the effects in the two sectors.
2.3 There is no evidence to date that patient
safety has been compromised. However there is evidence to suggest
that patients are being inconvenienced by the need to make more
frequent trips to the pharmacy. Also, receipt by patients of unfamiliar
brands or formulations of their medication may affect compliance.
3. PRIMARY
CARE
3.1 General practice accounts for approximately
80 per cent of NHS spending on medicines.
Availability
3.2 There is evidence to suggest that some
pharmacies do not have sufficient stocks of generic drugs to cover
the dispensing of three month prescriptions for those with limiting
long term conditions.
Category D drugs
3.3 The NHS Confederation is particularly
concerned to learn of the presence of drugs such as warfarin (stroke
prevention) and cimetidine (ulcer) in category D. These are treatments
of proven efficacy which have been available in generic form for
a number of years. In the case of cimetidine the price difference
between the generic and branded (Tagamet) product is three fold.
3.4 The dispensing of alternative branded
or higher price generic drugs in category D is believed to account
for only about a quarter of the total overspend experienced by
primary care budget holders. The balance of the overspend is as
a result of price rises.
Price increases
3.5 An analysis of cost increases from one
dispensing practice indicates a 150 per cent cost increase for
seven commonly used generics.[3]
These include frusemide (for symptoms of kidney disease) bendrofluazide
(raised blood pressure).
Packaging changes
3.6 The requirement to move to patient packs
is claimed by the generics industry as one of the primary causes
of the initial shortage of generics[4].
Budgetary impact
3.7 The estimates of the impact of the present
situation on primary care prescribing budgets are remarkably consistent.
Health authorities and PCGs across the UK estimate a 4-6 per cent
overspend on their prescribing budgets.
3.8 One Chief Executive with responsibility
for two PCGs has forecast overspends of £300,000 on budgets
of £5.6 and £6.3 million.
3.9 Health authorities and PCGs are yet
to see the impact of negotiated reductions in the price of branded
products under the new Pharmaceutical Price Regulation Scheme
(PPRS). This is likely to have a beneficial effect on prescribing
budgets but this discount has only five months of the current
financial year in which to make an impact.
3.10 The net effect of generic price rises
and PPRS discount effect is illustrated in the spreadsheet at
Annex A.
3.11 All prescribers and budget holders
are experiencing considerable delays in receiving accurate information
about the value of prescriptions dispensed. The PPA had already
been experiencing pressure of workload prior to the emergence
of the category D issue. The expansion in the number of prescriptions
dispensed under Category D terms has exacerbated this situation.
These prescriptions require written endorsement by pharmacists
and take longer to process.
3.12 At mid-October 1999 the time lag for
receipt of accurate information from the PPA is about 11 weeks.
There is no indication that this situation is easing. Indeed it
is likely that the delay may lengthen as a result of forward prescribing
to ensure patients have enough medicines to cover surgery closures
over the millennium holiday period.
3.13 The NHS Confederation is concerned
that PCGs may be set prescribing budgets for 2000-01 based on
information that is several months out of date.
3.14 Summary: impact on primary care
3.15 The main concern of The NHS Confederation
is the effect of the overspend in combination with the delay in
receiving accurate information on the value of medicines dispensed.
3.16 PCGs and, from April 2000, primary
care trusts (PCTs) have an extremely challenging task. Many of
the key Government reforms depend on the success of these organisations.
The impact of this unfortunate situation will be to damage the
morale of these new, and in some cases, fragile organisations.
For many participating General Practitioners (GPs) this is the
first taste of large scale budget management.
3.17 It is a sad irony that those GP practices
which have been the most successful in managing their practice
budgets by increasing the share of generic prescribing will be
the hardest hit.
3.18 The NHS Confederation is concerned
over service development implications caused by the requirement
to meet the deficit in primary care prescribing budgets.
4. SECONDARY
CARE
Availability
4.1 There is at present no evidence of absolute
shortages of any generic drug in hospital pharmacies. However,
hospital pharmacies are experiencing shortages of bulk packs of
commonly-used generic drugs with unfortunate consequences.
4.2 It is currently difficult to consistently
source the same manufacturers' packs. Nursing staff and patients
are presented with changes in product presentation and appearance.
This situation may affect compliance and may contribute to errors
in drug administration.
Category D drugs
4.3 The NHS Confederation is particularly
concerned to learn of the presence of drugs such as warfarin (stroke
prevention) and cimetidine (ulcer) in category D. These are treatments
of proven efficacy which have been available in generic form for
a number of years. In the case of cimetidine the price difference
between the generic and branded (Tagamet) product is three fold.
4.4 The dispensing of alternative branded
or higher price generic drugs in category D is believed to account
for only about a quarter of the total overspend experienced by
primary care budget holders. The balance of the overspend is as
a result of price rises.
Price increases
4.5 Hospitals pharmacies by virtue of stronger
buying power and manufacturers' pricing policies pay substantially
lower prices for all types of drugs.
4.6 The discount negotiated under the new
PPRS will have a more beneficial effect on hospitals due to the
higher proportion of branded prescribing.
4.7 The NHS Confederation is advised that
price increases for hospital pharmacies are coming to light but
that quantification of the effect on drug budgets is difficult
at this stage.
Packaging changes
4.8 The introduction of patient packs and
the reduced availability of bulk packs is causing a number of
problems in hospitals.
4.9 Bulk packs are used to prepare ward
stock packs for quick and accurate dispensing to individual patients.
The increased supply of patient packs is causing disruption to
this supply system.
4.10 The use of patient packs in many hospital
drug administration systems is wasteful due to the difficulty
of recycling part used packs, and the increase in patient packs
also has implications for storage space in dispensaries and on
wards.
Budgetary impact
4.11 The NHS Confederation is advised that
price increases for hospital pharmacies are coming to light but
that quantification of the effect on drug budgets is difficult.
5. POLICY
RECOMMENDATIONS
5.1 Availability
Role of the Medicines Controls Agency
5.2 It has been suggested by the pharmaceutical
industry[5]
that one of the factors contributing to the shortage of generic
drugs is the failure of a significant supplier to pass inspection
by the Medicines Controls Agency (MCA). The NHS Confederation
recognises the international reputation of the MCA in its role
safeguarding the quality of medicines in the UK. We would in no
way wish to see a dilution of its standards of inspection. Indeed
the Committee may like to consider recommending that the remit
of the MCA be extended to cover maintenance of supply to market.
5.3 Such a remit might include the necessity
for manufacturers to submit their plans on how to ensure supply
in circumstances of manor retooling, relocation, withdrawal from
markets, etc. This approach is likely to be preferable to an additional
price control mechanism for generic drugs.
Supply planning
5.4 Prior to the advent of the present situation
it would have been reasonable to assume that it is in the interests
of individual manufacturers to ensure that there is no interruption
in the supply of product to market. On the evidence of the current
situation this assumption does not appear to hold, suggesting
that the industry is unable to plan adequately for major change.
5.5 There may be some merit in improving
the dialogue between the industry and the Department of Health.
Where changes in the supply conditions can be anticipated it may
be appropriate for the Department to seek reassurance or even
detailed plans on proposed action by individual companies. The
planning for the Year 2000 by the Pharmaceutical Alliance might
present a useful model here.
Category D drugs
5.6 The category D system appears to be
working well in terms of its primary fuction, to ensure patients
receive effective medicines in a timely fashion.
5.7 At present pharmacists are able to dispense
against this provision once stocks fall to four weeks. With modern
supply chain systems it should be possible to obtain new supplies
(current problems notwithstanding) within a much shorter time
frame. Some consideration might be given to lowering this threshold.
This would reduce the amount of expensive substitutions but care
will be needed to ensure that there is no adverse impact on patient
care.
Price increases
5.8 The NHS Confederation has not presented
information on the causes of price rises as current evidence is
at best circumstantial. The NHS Confederation would urge the Committee
to consider a more thorough investigation into pricing of generic
drugs, including the role of wholesalers as well as manufacturers.
Packaging changes
5.9 Discussion is also needed as to the
availability to hospitals and pharmacies of bulk packs of commonly
used drugs. There is evidence to suggest that patient packs have
considerable cost and staffing implications in the hospital setting.
Budgetary impact
5.10 The NHS Confederation strongly believes
that some mechanism for alleviating the impact of price rises
on PCG budgets is needed. This is not to say that the overspend
should be "written off" with a one off cash allocation.
This would send out the wrong signals to the generics manufacturing
and supply industry.
Annex A
THE NET EFFECT OF GENERIC DRUG PRICE RISES
AND PHARMACEUTICAL PRICE REGULATION SCHEME (PPRS) DISCOUNT EFFECT
IMPACT OF THE INCREASE IN GENERIC PRICES
ON A TYPICAL PCG
| Typical PCG budget2 |
6,000,000 |
| Value of generic prescribing | 1,020,000
|
| Projected overspend | 300,000
|
| % increase in generic prices1 | 29.4
|
| Value of branded prescribing | 4,980,000
|
| PPRS discount effect for 5 months3 | -93,375
|
| Net effect on prescribing budget3 | 206,625
|
| % net effect | 3.4 |
| |
NOTES
1. Assumes entire overspend accounted for by generics.
2. Includes factor for "routine" inflation.
3. Positive value = overspend, negative value = underspend.
3
Correspondence 7 October 1999 to the NHS Confederation from Mr
Owen Richards, Chief Executive, Brentwood and Billericay &
Wickford PCGs. Back
4
Press release 19 July 1999 British Generic Manufacturers Association. Back
5
Press release 19 July 1999 British Generic Manufacturers Association. Back
| 
