Drug Price Loophole July 2016
Thank you for contacting me recently regarding the pricing of generic drugs by suppliers to the NHS.
I am aware of a recent investigation undertaken by The Times newspaper which claims that a number of individual firms have been exploiting the NHS through extortionate pricing of 'generic' (also known as 'off-patent') drugs. Indeed, the report estimates this practice is costing the NHS around £262 million a year.
The NHS drugs bill in 2013/14 was £14.4 billion, representing around 13% of total NHS spending in England. As I am sure you are aware, medicines may be 'branded' (also known as patented) or 'generic'. Under current regulations, only suppliers of medicines which are 'branded' may be subject to maximum pricing or profits.
The investigation by The Times newspaper claims that the four companies identified have focused on drugs that have been out of patent for many years, and which are not subject to similar pricing or profit restrictions.
As you may be aware, in September 2015 the Department of Health (DH) launched a consultation seeking views on proposals to change how prices of branded NHS medicines are determined. In the consultation, the DH acknowledge that it is aware of instances in which large increases in prices have been applied to certain drugs marketed as 'generics' that were formerly 'branded', due to a lack of regulatory control. Indeed, the DH acknowledge this has had an "adverse effect" on NHS budgets, and is considering options to allow the Health Secretary to limit the prices of 'generic' medicines. While we must await the Government's response to this consultation, I hope it will listen carefully to the concerns that have been raised by 38 Degrees and also more than 138,000 people who have signed a related online petition about this issue.
The Government state that where it suspects that price rises are excessive, it can alert the Competition and Markets Authority (CMA) and ask it to investigate. The Government has confirmed that the Secretary of State for Health has asked the CMA to look at the issues raised in the media recently. I can assure you that I will follow the outcome of this investigation closely.
More widely, I believe that the NHS is under enormous pressure and I am very concerned that the Government's plans to make £22 billion worth of efficiency savings by 2020 risk staff cuts and service closures. Patients are already suffering longer waits and poorer care, with hospitals overcrowded, understaffed and facing financial crisis. I believe the Government's policies are failing patients and failing the NHS.
Thank you once again for writing to me and for sharing your views. I can assure you that I will continue to stand up for the NHS.