NHS Drugs Rip-Off – Where Were the Procurement People?

There is an interesting but somewhat depressing, from a procurement perspective, story running in The Times at the moment.

Following an investigation the paper undertook to look at firms manufacturing generic drugs, it appears that the UK National Health Service (NHS) is being ripped-off to the tune of £ hundreds of millions. These firms – not the household name companies –buy the rights to long-established, off-patent drugs from large pharmaceutical firms.  They look for those “generics” that don’t have real competition in the market, and they are then able to charge pretty much what they like to the NHS for these drugs.

In numerous cases the producer has raised the price many times over recent years. As the Times reported, “the price of 32 drugs have risen by more than 1,000 percent over the past five years”. So a drug that cost £9.57 a packet five years ago in one case now costs £353.06! The price of Welldorm, an insomnia drug, rose from “£12.10 a pack to £138.56 between late 2014 and this month, an increase of more than 1,000 per cent”.

You can blame the firms or the private equity folk who have stood behind and financed them in many cases, but isn’t this at heart a huge failure of public procurement? We have got the full story here on our Public Spend Maters Europe site, which explains just how lax the system for setting prices is at the moment. Now the Competition and Markets Authority is now looking into “price-fixing” – but really, how have the firms been allowed to get away with this?

It would be good to hear from someone in NHS / Department of Health procurement to explain just why the rules have been so slack. Let’s face it, even if a drug has some sort of monopoly, the NHS is also pretty much a monopoly buyer, so the balance of power is certainly not all in the suppliers’ favour.  Or perhaps we need a Single Source Regulation Authority, as we have in the Ministry of Defence, to handle non-competitive procurement situations?

Anyway, do read our full analysis.

Voices (7)

  1. life:

    Down the pub? 🙂

  2. Sam Unkim:

    @ bitter

    That’s the clever/snide part. These drugs are niche low volume sellers, which other drug manufacturers don’t see any profit in, starting to produce from scratch. Of course, if the NHS was an intelligent customer they would develop alternative suppliers, perhaps as part of a subsidised bundled arrangement

    1. Paul Wright:

      Radical thought with not a lot of thinking through, but why doesn’t the NHS produce them themselves. Or to be a bit more logical, pay a contract pharmaceutical manufacturing company to make to order?
      As you said they might be a monopoly customer, so it is not like there is a market to distort. And they might be able to colloborate with other national health services. Of course the 2 or more years to approve the new products would be a major pain…
      But the point of using the private sector is that it is more competitive and efficient – which in this case it is not.

      1. Sam Unkim:

        Burn the heretic – The private sector is always better

        Lord Summerisle: “For believing what you do, we confer upon you a rare gift, these days – a martyr’s death.”

  3. bitter and twisted:

    If the drugs are generic and off patent how do companies have the right to them?

  4. Sam Unkim:

    With this kind of headline and several COmpanies creating activity – isn’t the UK well over due a USA style”False Claims Act” ?

  5. Final Furlong:

    Peter, you need to focus the ‘equivalent’ mechanism to the MOD one, specifically…

    https://www.gov.uk/government/publications/pharmaceutical-price-regulation-scheme-2014

    The drugs manufacturer exploited a ‘gap’ between the DH MPI team and the DH CMU team (the latter reports into the former). Once you have read (and understood) the PPRS mechanism, you will understand how this happened (and why it could very easily happen again).

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