The NHS Confederation gave written evidence to the health select committee's inquiry on generic drugs (news, page 4, 11 November), but found health minister John Denham's response unhelpful.

He suggested the net impact on the drug budget would be 0.5 per cent, a figure which would be offset by the effect of the new pharmaceutical price regulation scheme discount.

This is at odds with the experience of primary care groups and health authorities. The net effect of all factors affecting drug budgets (activity growth, PPRS, price changes, pharmacy discount clawback etc) is estimated at an average 3.6 per cent overspend.

The minister stressed the need to improve prescribing in primary care through - among other things - raising the proportion of generic prescribing.

In the current situation, where the rising price of generics is the main cost pressure, this advice is not helpful. He also recommended that PCGs should have money set aside for unforeseen costs. This may be so. But a reserve equal to 3 or 4 per cent of the main budget is unrealistic, and would require reductions in other services.

He suggested that HAs might have set unrealistic drug budgets.

Again this may be the case, but the most likely source of variation locally is the variation of funds allocated to HAs as a result of the national formula.

If PCGs are meant to be at the forefront of modernising the NHS, the pressure on their budgets should be alleviated. Transition from PCG to primary care trust status with a potential£250,000 deficit is a less than attractive proposition.

We also suggest a thorough investigation into the operation of the generic drug industry to ensure a more consistent supply of medicines in future.

We will be writing to Mr Denham to make these points.

Tim Jones Policy manager NHS Confederation