Market study into the distribution of medicines in the UK

Apr 5 2007

The OFT has launched a market study into the distribution of medicines in the UK. This decision follows recent and proposed distribution changes by leading UK medicine suppliers.

Until recently all medicines were distributed through a number of competing wholesalers but in March 2007 Pfizer Limited began selling prescription drugs solely through one wholesaler, Unichem. Other suppliers are also considering introducing significant changes to their own distribution arrangements.

The study will consider the likely impact of such changes on competition, the NHS and patients and will report back by the end of the year. Download a short document outlining why UK medicines distribution meets the prioritisation criteria for launching a study, and the focus and timescales of the study from the OFT website.

The decision to undertake a market study reflects the importance of ensuring that the distribution of medicines involving pharmacists, hospitals and dispensing doctors, is timely, efficiently delivered and cost effective for patients.

The NHS spends more than £10 billion per year on the purchase of prescription medicines. UK pharmacies currently provide more than 800 million prescriptions per year. At the end of the market study, the OFT will have a better understanding of the impact of the changes that are taking place and whether further action is required. Ann Pope, OFT Director in Markets and Projects, said: 'This is an important market study in one of the OFT's priority sectors.

Recent changes in the distribution arrangements for some medicines have caused great concern to many in the market. It is important for us to understand the likely impact of these changes on patients and costs to the NHS.'

1. Interviews are available to the media.
2. The OFT has received complaints regarding the change to the workings of the sector which has prompted concern among pharmacists, dispensing doctors and competing wholesalers. In examining the issues the OFT will consult industry and government and consider the influence of sector specific regulations, parallel trade and counterfeit products.
3. Healthcare is an OFT priority sector. The efficient distribution of medicines is necessary to their timely and cost effective provision. In February the OFT also recommended that the Pharmaceutical Price Regulation Scheme (PPRS) should be reformed, to deliver better value for money from NHS drug spend and to focus business investment on drugs that have the greatest benefits for patients.
4. The gathering of information in market studies is undertaken by the OFT under section 5 of the Enterprise Act 2002. Possible outcomes of a market study include: giving the market a clean bill of health; publishing information to help consumers; encouraging firms to take voluntary action; encouraging a consumer code of practice; making recommendations to the Government or sector regulators; investigation and enforcement action against companies suspected of breaching consumer or competition law; a market investigation reference to the Competition Commission.