Select Committee on Health Written Evidence


Supplementary memorandum by British Association of Pharmaceutical Wholesalers (PI 24A)

  In August the British Association of Pharmaceutical Wholesalers (BAPW) submitted written evidence to the Health Select Committee's inquiry into "The Influence of the Pharmaceutical Industry".

  Further to that evidence, the BAPW wanted to highlight a practice the branded pharmaceutical industry is increasingly adopting, which is to limit supplies of vital medicines to pharmaceutical wholesalers, which we believe is ultimately to the detriment of patients.

  Under this new practice, branded pharmaceutical companies are arbitrarily setting quotas on the amount of medicines they will sell to wholesalers, purportedly in order to "better manage medicine stocks" for themselves. This is done without consultation or discussion with wholesalers, who, as a result, have no opportunity to influence the level at which their quotas are set, Indeed, some of those companies imposing quotas make no attempt to explain the criteria by which levels are set.

  Clearly in the classical manufacturer-wholesaler-retailer-patient model, where most manufacturers are anxious to meet wholesale demand to reach customers as soon as possible, this is an unusual development. And the BAPW believes that they may have worrying consequences for patients.

  Under usual circumstances, our members would order from manufacturers the amount of stock they needed to meet patient demands and deliver it quickly and safely up to four times a day to hospitals and pharmacists, as it was required. However, under the new quota systems, some manufacturers have begun to set a limit on the amount they will supply to wholesalers.

  But as in any market, demand for medicines peaks and troughs. And when demand is high, some wholesalers have exceeded the limits set on them by manufacturers who have then refused to supply any more. Rather gravely, this means that with increasing regularity, some of our members have been unable to supply local doctors and pharmacists with the amount of medicines they need to treat their patients. (The BAPW would be happy to provide more details of where this has happened and with which manufacturers.)

  We believe that the only way demand can accurately be measured, and the supply chain to patients be made to work properly, is for wholesalers, retailers and manufacturers to follow the signals of the market. For generic medicines, wholesalers could source products from alternative suppliers to meet demand but in the case of proprietary medicines, manufacturers know that, because of patent protection, they have a monopoly over supply—if they do not supply their medicine, they know no one else can. And to the safe and quick delivery of medicines to patients, this could represent a serious impediment.

  In most, if not all of these cases of supply failing to meet demand, retailers will have been able to source medicines from other wholesalers, but this may not always be the case. If demand for a product were to peak—for instance because of a high winter demand for a product—doctors and pharmacists have little or no assurance that wholesalers would be able to meet it because quotas limit the amount of stock they are able to hold and supply. The BAPW therefore believes that the quota system has the potential to seriously disrupt the supply chain, slowing down access to vital medicines, and endangering patients' lives.

  Manufacturers may defend their actions by saying that they have provided enough stock to satisfy demand, but patient requirements and expectation in Penzance are not satisfied by the stock only being available in Newcastle, or Manchester, for example, where a pharmacist or doctor may have no relationship with the wholesaler stocking it.

  Whilst pharmaceutical wholesalers are firmly committed to leading improvements in the supply chain (for example, wholesalers provide the computer systems to 50% of the UK's pharmacies), we believe that in this case the adage "if it ain't broke, don't fix it" firmly applies. At the very least the pharmaceutical industry should be able to make the case that this change has made the supply chain more efficient and has real benefits for those who need the medicines they supply—patients. We believe that on this occasion it has not done so.

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Prepared 26 April 2005