MEMORANDUM BY CROYDON HEALTH AUTHORITY
CURRENT SHORTAGE OF GENERIC DRUGS AVAILABLE
TO NHS (GD6)
1. BACKGROUND
The author is Pharmaceutical Adviser to a health
authority. The role of this post is to provide strategic advice
to the health authority on clinical, professional and policy matters
in relation to pharmaceutical services, the prescribing of drugs,
the introduction of new drugs, clinical effectiveness, GP prescribing
budget setting and PCG performance management.
2. EXECUTIVE
SUMMARY
The two main reasons for the shortage of generic
drugs in the NHS appear to be the closure of Regent Laboratories,
and the introduction of patient packs for medicines in order to
comply with European Union directive on pharmaceutical labelling.
The shortage of generic medicines means that
the NHS pays for whatever medicine can be supplied in the marketplace
rather than the NHS generic price for that medicine. Additionally
when generic medicine become available as patient-packs the cost
is usually higher than previously.
This is causing several problems for the NHS:
— Severe financial pressure on GP prescribing
budgets, which may mean PCGs and health authorities needing to
find money to offset a prescribing overspend for 1999-2000.
— GPs losing the incentive to work
to improve the cost-effectiveness of their prescribing, when faced
with an increase in prescribing costs which is outside of their
control.
— Delays with prescribing information
reaching the NHS from the Prescription Pricing Authority. This
information is used by PCGs and health authorities to set prescribing
budgets, monitor financial performance and develop more cost-effective
prescribing.
It is not certain that the 4.5 per cent price
reduction on medicines negotiated as part of the Pharmaceutical
Price Regulation Scheme will be fully realised by the NHS.
3. REASONS FOR
CURRENT SHORTAGE
OF GENERIC
DRUGS IN
THE NHS
There appear to be two main reasons causing
athe shortage of generic drugs in the NHS at the present time.
These are:
(a) The closure of Regent Laboratories
The Medicines Control Agency, the body which
regulates the safe production of drugs, required Regent Laboratories
to close in December 1998 because of a contamination problem in
its medicines production process. Regent supplied nearly 10 per
cent of the volume of the NHS's generic medicines. The impact
of the closure of Regent on the supply of generic medicines was
not widely publicised within the NHS in early 1999.
(b) The introduction of patient packs for
medicines
In order to comply with the European Community
directive 92/27/EEC on pharmaceutical labelling, and the provision
of information to patients, patient packs for medicines are being
introduced in all EU states by January 1999. Patient packs are
manufacturers "original packs" containing a course of
medication with a patient information leaflet in a "ready
to dispense pack". The introduction of patient packs means
that all pharmaceutical manufacturers have needed to introduce
packaging facilities that enable patient packs to be produced.
They therefore have to invest in new facilities, or transfer production
to other facilities in order to produce patient packs. This has
been a greater problem for generic manufacturers because they
have traditionally supplied medicines in large bulk containers,
often holding 500 or 1,000 tablets, which are widely used by community
pharmacists and dispensing doctors for supplying against NHS prescripitons.
Community pharmacists and dispensing doctors are responsible for
their own medicines purchasing arrangements.
The planned introduction of patient packs was
the subject of discussions between the Depatment of Health, British
Medical Association, General Medical Services Committee, Royal
Pharmaceutical Society of Great Britain, Pharmaceutical Services
Negotiating Committee, Medicines Control Agency, British Generic
Manufacturers Association and the Association of the British Pharmaceutical
Industry in 1996 and 1997. Agreement was not reached on the introduction
of patient packs into the NHS; therefore advice has not been issued
to the NHS or the pharmaceutical industry on how they should be
introduced.
4. EFFECT ON
NHS PAYMENT SYSTEMS
The Drug Tariff, the monthly guide to the price
the NHS will pay for medicines, lists the price the NHS normally
pays for generic medicines. These prices are usually much lower
than the price of branded medicines and do not fluctuate significantly
month by month. But at the present the NHS is paying considerably
more for generic medicines, which are either unavailable or in
short supply. This is due to two reasons:
(a) When there is a problem with the availability
of a drug at the lowest market price. The Drug Tariff will indicate
that the Prescription Pricing Authority (PPA) will pay the actual
invoiced price of the medicine, rather than the generic price.
This is known as category D. The invoiced price paid may be considerably
more than the previous generic price of a medicine. For example
a pack of 56 aciclovir tablets 400mg (used for treating some viral
infections) has increased in price from £16.20 to £28.28.
The number of medicines classed as category D has been increasing
steadily over the last six months from a handful of medicines
to nearly 100. Which medicines are affected changes month by month.
This unpredictability makes it very difficult to predict the financial
impact to the NHS of the shortage of generic medicines.
(b) The introduction of patient packs for
generic medicines. When generic medicines become re-available,
as patient packs, the cost of the generic medicine is usually
higher than previously. For example 28 frusemide 40mg tablets
(a diuretic tablet) has increased from £0.29 in April 1999
to £2.25 in October 1999, after a patient pack for frusemide
was introduced in May 1999. It is unlikely that the price for
generic medicines will revert back to the previously low levels
seen before the introduction of patient packs.
The size of the effect of the shortage of generics
and the introduction of patient packs is difficult to estimate
financially. many health authorities are estimating that these
factors are causing GP prescribing costs to increase by 3 or 4
per cent in 1999-2000, in addition to the overall rate of growth
of prescribing costs, which is between 4 per cent to 8 per cent.
5. SHORT TERM
FINANCIAL IMPACT
TO THE
NHS
Primary Care Groups (PCG) are facing severe
financial pressure on their prescribing budgets because of the
issues outlined in paragraphs 3 and 4. Many PCGs are facing significant
forecast overspends on their cash-limited prescribing budgets
for 1999-2000. In Croydon PCGs are facing between a 0.92 per cent
overspend and 3.18 per cent overspend, which is resulting in a
forecast overspend for Croydon for 1999-2000 of more than £500,000
for 1999-2000. The total prescribing budget for Croydon PCGs is
£25.5 million. Some other areas are in a much worse financial
position than this. In contrast, in 1998-99 Croydon GPs underspent
the Croydon prescribing budget by 2.54 per cent, and have reduced
the rate of growth in prescribing costs to around 3 per cent to
4 per cent per year.
Any overspend on PCG prescribing budgets will
impact on other areas of health services expenditure, because
now this budget is cash-limited as part of the PCG unified Hospital
and Community Health Services budget. In 2000-2001 PCGs and health
authorities will need to find money to offset any prescribing
overspend this year. This means that the money used to offset
prescribing overspends will not be available to invest in other
NHS services.
6. EFFECT ON
GPS
Faced with such potentially serious financial
problems which are seen as a lost cause outside their control,
many GPs will lose their incentive to work hard to improve the
cost-effectiveness of their prescribing. This will have a long-term
detrimental effect on PCGs ability to manage their prescribing
budget.
7. LONGER TERM
FINANCIAL PLANNING
Prescribing budget setting and monitoring, and
developing cost-effective high quality prescribing in the NHS
relies almost completely on the information about GP prescribing
supplied by the Prescription Pricing Authority. This is one of
the best quality information sources in the NHS. One of the knock-on
effects of so many generic medicines being put in category D,
as explained in paragraph three, is that it is more time consuming
for the PPA to process prescriptions for making payments to community
pharmacists, and to generate information on GP prescribing. This
means that there is a delay in the prescribing information that
health authorities, PCGs and GPs use being produced by the PPA.
The PPA are working hard to rectify this, but are disadvantaged
by the scale of the problem. Usually the PPA makes monthly information
available about six to eight weeks after the end of a month. However
at the moment the information is taking nearly 12 weeks to be
produced, and the PPA are forecasting that this will increase.
It may take the PPA up to two years to be able to return to the
point when they can produce information six to eight weeks after
the end of a month.
Financial planning and forecasting for setting
2000-01 prescribing budgets will be greatly hindered by the present
lack of timely information on current GP prescribing. The delay
in receiving prescribing information also means that PCGs prescribing
advisers are less able to identify relevant areas where GPs could
improve the cost-effectiveness of their prescribing, and to monitor
any changes made.
8. PHARMACEUTICAL
PRICE REGULATION
SCHEME (PPRS)
It is probable that very little information
will be available to PCGs and health authorities in time for prescribing
budget setting for 2000-01 indicating the effect of the 4.5 per
cent reduction in prices from October 1999 through the PPRS. The
NHS is hoping that the savings generated by this price reduction
may offset any overspends on prescribing budgets caused by the
shortage of generic medicines. This is not a certainty. At the
moment it is not clear how the pharmaceutical industry are implementing
this price reduction. The price reduction of 4.5 per cent is an
average, and a pharmaceutical company may apply price reductions
to its products differently. Depending on the mix of products
used in a PCG, or whether the price reduction is mainly applied
to medicines only used in hospitals will affect how big the benefit
is of this price reduction locally.
It may be helpful to look at what happened when
a price reduction was negotiated as part of the PPRS in the past.
A 2.5 per cent price reduction in the PPRS came into effect in
October 1993. An analysis of prescribing spend and rate of growth
prescribing costs in Croydon suggests that this had a negligible
effect on the rate of growth prescribing costs subsequent to the
price reduction in October 1993. It is hoped that the present
4.5 per cent reduction has a greater impact than the reduction
in1993.
9. SUGGESTIONS
FOR WAYS
FORWARD
(a) Practical transitional help is given to the PPA to
improve the present situation and reduce the delays in prescribing
information reaching the NHS.
(b) Planning at a top strategic level is
required to support the health authorities and PCGs manage the
present situation.
(c) Real consideration is given to the overall
financial impact on total NHS spending if no solution to this
problem is forthcoming.
November 1999
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