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Generics concessionary price hikes cost CCGs additional £86.3 million in 2017-18, finds NAO

Generics concessionary price hikes cost CCGs additional £86.3 million in 2017-18, finds NAO

June 8 2018 Unexpected price increases for generic medicines in 2017 added an additional...

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  • Extra £20m funding will go hand-in-hand with a new 10-year plan for the NHS

    Extra £20m funding will go hand-in-hand with a new 10-year plan for the NHS

    Monday, 18 June 2018 17:31
  • N Ireland announces £8.8m investment in GP services

    N Ireland announces £8.8m investment in GP services

    Thursday, 14 June 2018 14:27
  • Generics concessionary price hikes cost CCGs additional £86.3 million in 2017-18, finds NAO

    Generics concessionary price hikes cost CCGs additional £86.3 million in 2017-18, finds NAO

    Friday, 08 June 2018 08:36
  • £10m fund announced to help improve GP retention

    £10m fund announced to help improve GP retention

    Friday, 01 June 2018 12:05

a pound imageJune 8 2018

Unexpected price increases for generic medicines in 2017 added an additional £315 million to NHS drugs expenditure, the National Audit Office has found. This equated to 9% of the generics drugs budget of £3.5 billion for 2016-17, and added £86.3 million to clinical commissioning groups’ costs.

The number of concession price requests from pharmacies also increased sharply, from a level of 150 in May 2017 to 3,000 in November 2017. These requests are made when pharmacies are unable to source generic medicines at or under the price set by the Department of Health and Social Care and listed in the monthly Drug Tariff. 

In total, the DHSC granted 709 price concessions in 2017-18, up from 282 in 2016-17, a 151% increase. In one example, “at its peak, the concessionary price that the Department set for quetiapine 100mg tablets (which is used to treat mental health conditions) was £113.10, 70 times higher than its previous set price of £1.59.”

The NAO investigation on NHS spending on generics medicines in primary care followed concerns raised by NHS England of “significant unbudgeted pressure” on clinical commissioning groups (CCGs). Its new report says that the increase between the net spend on price concessions for generic medicines in primary care in 2017-18, was seven times greater than that in 2016-17.

Included in the report is reference to concerns raised by the DHSC around supply issues, and the fact that the Department had identified increases in manufacturers’ prices and unexpected growth in wholesalers’ margins in 2017, which it could not fully explain. 

“The Department’s analysis also demonstrated that the concessionary prices it had granted were set higher than necessary above wholesalers’ selling prices. It estimated that this amounted to £86.3 million of additional costs for CCGs in 2017-18 which it expects to be recouped in subsequent years through the established reimbursement mechanisms,” said the NAO.

Warwick Smith, Director General of the British Generic Manufacturers Association (BGMA), has welcomed the report “and the clarity it has brought to the circumstances around the recent increase in the number of concessionary reimbursement prices for generic medicines.” 

He pointed out that the report found that generic medicines prices in the UK may be lower than in other comparator countries, and that the increases in concessionary prices were not wholly as a result of increases in manufacturers’ prices.

“All in the supply chain should be proud of the fact that despite two major volume manufacturers not being able to supply medicines due to regulatory issues, patients were usually still able to access their medicines and other generic medicines manufacturers have now been able to step in and fill the gap. However, disruption to supply and production changes to meet the shortfall do inevitably lead to increased costs,” said Mr Smith.

“Our own data based on all generic medicines in the market show that, while there was a higher value of concessionary priced products in 2017, the actual average reimbursement price per product reduced by more than 30p compared to 2016, even taking into account the impact of concessionary prices. This demonstrates the overall value that generic medicines deliver in terms of reducing cost and increasing access for patients.”

Links:
National Audit Office announcement    
NAO ‘Investigation into NHS spending on generic medicines in primary care’. June 8 2018.          
BGMA statement          

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