Investigation into UK drug distribution

Marianne Barriaux

The Office of Fair Trading (OFT) is to investigate the distribution of medicine in the UK following the implementation of a controversial new supply arrangement between Pfizer and Alliance Boots’ UniChem wholesaling business.

Until recently, all drugs were distributed through a network of wholesalers to pharmacists, dispensing doctors and hospitals.

But at the beginning of March, Pfizer implemented a new arrangement whereby UniChem became the sole supplier of its medicine, in a scheme which saw the pharmaceutical giant sell its drugs directly to pharmacists and pay UniChem a set fee for its services.

The direct-to-pharmacy move proved hugely controversial.

Pharmacists, dispensing doctors and wholesalers said it was anti-competitive, as wholesalers were no longer competing with each other to sell Pfizer products, and warned that it would increase costs for the NHS.

AstraZeneca and Swiss drug group Novartis have both invited wholesalers to tender for a similar direct-to-pharmacy model, and US company Eli Lilly is also looking at changing its supply chain in the UK.

Today, the OFT said it would study the distribution of medicine in the UK and report back by the end of the year.

Ann Pope, director in markets and projects at the OFT, said: “This is an important market study in one of the OFT’s priority sectors.

“Recent changes in the distribution arrangements for some medicines have caused great concern to many in the market. It is important for us to understand the likely impact of these changes on patients and costs to the NHS.”

The NHS spends more than £10bn a year on the purchase of prescription medicines, and pharmacies currently provide more than 800m prescriptions a year.

In response to the OFT move, Alliance Boots said this morning that the market study “does not affect the operation of the Group’s direct to pharmacy distribution arrangements with Pfizer”.

Alliance Boots is currently on the receiving end of a £10bn private equity-backed bid from its deputy chairman and largest shareholder, the Italian billionaire Steffano Pessina.

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