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Times accuses pharma of 'defying' OFT drug distribution enquiry

Three pharmaceutical companies are "in defiance" an OFT competition inquiry by making changes to the way they distibute prescription medicines to UK patients, says a report in The Times.

A report in The Times has accused three pharmaceutical companies of ignoring an Office of Fair Trading (OFT) competition inquiry by making changes to the way they distibute prescription medicines to UK patients.

Napp Pharmaceuticals has already switched to an exclusive distribution arrangement with Unichem, the wholesale arm of Alliance Boots, and two other pharmaceutical wholesalers, AAH and Phoenix, the report revealed.

Also mentioned were French pharmaceutical company sanofi-aventis (S-A), which will create a similar network at the beginning of November 2007, and US-based Schering Plough, which may also follow suit at the start of 2008.

The report claims that by appointing three distributors, companies will be able to say that there will still be an element of price competition.

OFT concerns
The OFT announced it would begin its review back in April 2007, saying it would examine how recent and proposed changes to distribution arrangements might affect competition, the NHS and patients.

The OFT review, which was launched after Pfizer's decision to appoint Unichem as its sole UK distributor in 2006, will examine the motivation for the changes and their impact on competition and choice in wholesaling.

The OFT is worried that the changes could increase drug manufacturers' control over drug-pricing in the UK and thus create a monopoly. The new system, according to the Times, could damage patient safety by causing life-threatening delays should wholesalers run out of medicines.

A report will be published in December 2007, with the Department of Health (DoH) having 120 days to respond.

Martin Sawer of the British Association of Pharmaceutical Wholesalers, said in The Times report that he was very disappointed that some manufacturers had decided to introduce the changes before the OFT had published its report.

"It would have been much better if they had waited. It could make things even more complicated," added Sawer.

S-A responds to Times report
Head of brand communications at S-A, Jennifer Wilson, told PMLive: "It is important to note that sanofi-aventis will continue to sell to wholesalers exactly as we do at present. We have simply reduced the number of wholesalers who purchase sanofi-aventis medicines directly from sanofi-aventis. There is no change to their wholesaler status, and they will continue to control discounts, stock levels and the delivery frequency of sanofi-aventis medicines to pharmacies, hospitals, dispensing doctors and any other customer. We believe that the new arrangements are compliant with all applicable laws."

"We will have greater visibility of the availability of our medicines in the supply chain, earlier awareness of potential stock shortages, simplicity of any need for recall, and an enhanced integrity in maintaining the quality and authenticity of medicines in the chain," added Wilson in response to The Times' claims that patient safety would be affected.

The three wholesalers will offer 100 per cent national coverage in the UK. AAH, Phoenix and UniChem already distribute nearly 90 per cent of all medicines in the UK and pharmacists should already have existing arrangements with one or more of these wholesalers, ensuring continuity of supply, says S-A.

The company could not comment on what other options it considered, but confirmed an in-depth review of its processes did take place before reducing the number of wholesalers.

"Obviously, a review did take place, and we decided the new arrangement was the best option for improved business efficiency and integrity," concluded Wilson.

Mike Isles, supply chain director of S-A UK, added: "Pharmacists, hospitals and dispensing doctors are important customers for sanofi-aventis and are the vital link in ensuring that we can get our medicines to patients who need them. Under this new arrangement we can maintain the service levels that our customers experience today while improving supply chain efficiency in the delivery of our medicines to patients."

Elsewhere, Anglo-Swedish drug group AstraZeneca (AZ) has shelved plans to use two distributors, denying that the decision was related to OFT activities.

30th September 2008

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