NHS drug shortage looms as pound falls

When the pound was strong, so-called “parallel traders” could buy drugs in Europe and sell them in the UK at a profit. But there is evidence that these traders are now attempting to buy up UK supplies, repackage them, and export them at a profit to Scandinavia and Germany.

Drug manufacturers and wholesalers have begun rationing the amount of certain drugs each UK pharmacist, GP and hospital dispensary can buy. Pharmacists report that in some cases patients have had to wait days for their drugs.

The change in the market could also lead to higher costs for the NHS as pharmacists attempt to recoup the lost savings.

Parallel traders wanting to import drugs into the UK that were originally manufactured, packaged and priced for sale in another country must apply for a licence from the Medicines and Healthcare products Regulatory Agency. Its latest data shows a 60 per cent drop in the number of applications from November 2007 to November 2008.

British Association of European Pharmaceutical Distributors secretary general Richard Freudenberg told HSJ that was because the fall in the pound had made a lot of products “unviable for importation”. That is a concern as think tank the Office of Health Economics estimates parallel imports make up 12 per cent of the UK pharmaceutical supply.

Falling profits

Mr Freudenberg said parallel traders were generally only interested in importing drugs where there was a 20 per cent difference between what they paid and what they could sell it for. But the pound has fallen by more than 20 per cent in the last 12 months, wiping out much of that potential profit.

The parallel trade is controversial. There have been claims it has caused drug shortages in countries such as Greece and Spain, which have been targeted by traders wanting to source low-cost drugs.

Martin Sawer, executive director of the British Association of Pharmaceutical Wholesalers, which represents the largest drug distributors in the UK, warned there was a danger the UK could become “the new Greece or the new Spain”.

“There is a lot of evidence of British products in the Scandinavian countries and in Germany,” he said.

A growth in exports from the UK could exacerbate any drug shortages caused by the fall in cheap imports. In the last four months of 2008, the MHRA issued 41 per cent more export certificates than the same period in 2007.

The government’s latest data on pharmaceutical exports to the 14 other strongest EU economies shows they have been growing steadily for the last two years. The biggest monthly increase was between May and June this year when the value of exports surged by 33 per cent from£626m to£832m - a 51 per cent increase on the value of exports in June 2007.

By October 2008, the value of exports was 27 per cent higher than a year earlier.

Supply and demand

Manufacturers and wholesalers have responded by imposing quotas on the volume of drugs UK pharmacies can buy in an attempt to cut off supply to parallel exporters. Individual pharmacies are being monitored for unusually large orders, which might suggest they were selling drugs on into Europe.

The Pharmaceutical Services Negotiating Committee represents pharmacists in contract negotiations with the NHS. Its head of information services Lindsay McClure told HSJ the quotas were so far preventing medicines going out of stock completely, but had meant some patients having to wait “two or three days” if their pharmacist had exceeded their quota and needed to apply for extra supplies.

A Department of Health spokeswoman said it was “monitoring the situation closely”.

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Source: Pharmaceutical Services Negotiating Committee