In short supply: Scarce and expensive medicines

What does the current shortage of a range of generic medicines mean for community pharmacy contractors and their patients?

Recent routine inspections by the European Medicines Agency (EMA) at a Bristol Laboratories generics manufacturing site in Luton and a Dr Reddy’s plant in India did not go well. The EMA found the sites did not “comply with good manufacturing practice”, which led to the MHRA closing them. This is, of course, what protocol demands, but the knock-on effects to the medicines supply chain, along with ingredient shortages elsewhere, are still reverberating through community pharmacies across the country.

Contractors have reported difficulties sourcing a large number of medicines for patients – with both shortage and subsequent rocketing pricing issues playing a part – which PSNC says is having “a huge impact on workload and a catastrophic impact on cash flow” for many pharmacies.

Catastrophic consequences

We have seen this kind of issue before, but how serious is it this time?

With pharmacy teams having to put in extra work to source medicines for patients, this is clearly an additional pressure at a time when many pharmacies are struggling to survive punishing cuts in NHS funding.

As if that’s not challenging enough, the impact of reductions in Category M prices have taken full effect from November. Mike Dent, PSNC director of pharmacy funding, said PSNC has been “concerned for the ability of small pharmacies, which have been particularly badly hit by the government funding cuts, to survive the combined pressures”, explaining: “We have stressed this to the Department of Health and minister, explaining the need for urgent intervention to ensure that pharmacies can manage the cashflow crisis.”

In an unprecendented move, government responded by confirming that pharmacy contractors would receive an additional 15p per item in advance payments in November. While factors such as the removal of regulatory lag and the increasing use of branded generics by CCGs are adding to problems with supply and prices, this lack of resilience of the supply chain is not a new issue.

Sigma Pharmaceuticals director Rajiv Shah has said in the past that generic drug shortages were costing independent pharmacists in England up to £10 million a year – and some independent pharmacies have forecast they could lose up to £2,500 a month if the shortages continue.

One group of mainly independent pharmacy owners in the South of England is predicting that their operating profits are set to drop by a further five to six per cent, with their spokesperson placing the blame squarely at the feet of pricing.

“Prices paid in the UK are much lower than in many countries, so why would a manufacturer sell at a lower price to the UK, especially when demand outstrips supply?” he says. 

“Also, we have seen many drugs not affected by the shortages also rising in price, which makes us wonder if wholesalers are taking advantage of the current situation?

He admits that price concessions have helped, but says there remains a major flaw, which is that “the drugs on the price concession list are included in the mandatory discount list and therefore we still suffer a loss as we are unable to buy drugs at prices lower than the concession prices.”

He adds that branded medicines are suffering from supply shortages too: “All the time, and especially when the generic price goes above the branded product price.”

Brexit uncertainty

As with so many business arrangements, Brexit is likely to add its own complications to the generics supply mix, although Mr Dent says it is “too early to tell” what these might be.

For our group of pharmacy owners in the South the feeling is “it will get worse unless prices rise in UK,” with their spokesman saying: “Post Brexit we will have a UK regulatory authority which we hope will be more responsive to UK issues, but the days of cheap drugs are coming to an end and the drugs bill will have to be revisited by the government in place.”

Patient concerns

A more pressing issue for him and his colleagues is that patients have already noticed that there is a problem, and they are not happy.

“Despite the extra workload of spending hours to source stock, we have been unable to fill scripts and in some cases patients’ meds have had to be changed – and they blame us”, he says.

He is concerned that the problem is not being tackled. “The government rightly has regulatory bodies – such as the GPHC and the MHRA – who make sure patient safety is paramount, but they seem to bury their heads in sand when the supply issue comes up. No one, it seems, is looking into this even though it becomes a patient issue,” he comments.

The multiples are slightly better equipped to weather this storm, with access to more stock through their wholesale network, the ability to carry larger buffer stock and larger buying power enabling them to set agreements at better prices.

Nonetheless, Celesio UK advises against over-confidence – and panic buying – with a spokesperson saying: “ We have no reason for concern about stock levels providing our customers place orders in line with their normal patterns [and] we appreciate the cooperation of our customers in not over ordering and maintaining normal demand. Our priority is always patient safety and we will ensure that all our customers get a fair share of stock.”

What can be done?

With contractors and patients alike bearing the brunt of the shortages, what is the solution?

PSNC and The British Generic Manufacturers Association (BGMA) say they continue to work with the Department of Health to find solutions to “ensure any impact on patients is kept to an absolute minimum” and “offer some relief for contractors”, with BGMA director general Warwick Smith reassuring pharmacy contractors that their “focus and priority is on quality and security of supply”.

Mr Dent says PSNC remains of the view that “a wholesale market which promotes competition and allows pharmacies to choose from a number of medicines suppliers is the best way to ensure that we retain a resilient medicines supply chain and that community pharmacies can continue to provide patients with the medicines they need, when they need them”.

He says that PSNC “will do all that we can to promote this”, but while discussions continue, is there anything that community pharmacies, GP prescribers and CCGs can do?

In the immediate term, Mr Dent asks that GPs and CCGs are simply “willing to consider alternatives when pharmacies are unable to obtain stock at the Drug Tariff price” and that “community pharmacy teams please do continue to report generic issues using the generic shortages form which can be found here.” He adds: “These reports form a very important basis on which price concessions are agreed and we would like to thank those contractors who have already taken the time to fill in the form.”

However, our South of England group is less confident of the mitigating power of healthcare providers when it comes to finding a solution to recurring problems with medicines supply.

Their general consensus on the problems they are experiencing is far from positive: “Generic drugs are a commodity with no price control and there will always be price fluctuations due to supply vs. demand, and at times manipulation of prices as well. We need more players in the market, and the government needs to encourage and incentivise this, otherwise many businesses will struggle, and there is the potential for the loss of jobs, investment and so on. This is not acceptable and it just shows how our negotiating bodies are ignorant or have not addressed this issue.”

The price concession process

Price concessions only apply to the month in which they are granted and the Department of Health (DH) requires PSNC to apply/ re-apply for concessions on a monthly basis. After each new monthly application, DH will undertake checks before making a decision. In some cases, there is discussion between PSNC and the Department of Health on an individual product’s circumstances, but this can take time. 

PSNC says it would like to see changes to the arrangements that would allow contractors to have certainty over how much they will be reimbursed much earlier in the month, a point it says it has “raised with DH on many occasions”.

Another hurdle is that PSNC cannot provide details of generic products that are suspected of being affected by generic supply problems until concessions are granted, and is also prevented from directing contractors to specific suppliers who may have stock at a lower price by competition law. While admitting this is “extremely frustrating”, PSNC says this is “necessary in order to avoid market manipulation and potentially worsening any shortage situations”.

November was expected to be when the impact on contractors was most significant as a result of the reductions in Category M prices implemented in the August Drug Tariff.

Further guidance is available here.

The days of cheap drugs are coming to an end and the drugs bill will have to be revisited by the government

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