UK: OFT launches study into the distribution of medicines in the UK

29 May 2007

Ewan Grist

Following proposed changes to the model by which UK pharmaceuticals companies distribute their medicines, the OFT has launched a short market study into the distribution of medicines in the UK.

Pharmaceuticals companies have traditionally distributed their medicines through a range of competing wholesalers but in March 2007, Pfizer broke the mould by starting to distribute prescription drugs exclusively through one wholesaler, Unichem. Other suppliers are now considering following suit despite concerns raised by pharmacists, doctors and competing wholesalers.

This potential shift in distribution models used by the pharmaceutical industry has concerned the OFT sufficiently to warrant a market study into its potential implications. The areas that the OFT will focus on include competition aspects as well as the possible direct effects such a change may have on the NHS, pharmacists, dispensing doctors and patients in terms of the efficiency and cost of medicine provision. More than £10 billion is spent each year by the NHS on prescription medicines and for this reason, significant changes in the way such medicines are distributed need to be carefully considered. The study will also consider the potential effects of the ‘direct to pharmacy’ distribution.

The OFT describes possible outcomes of the study as including: (i) giving the market a clean bill of health; (ii) encouraging a consumer code of practice; (iii) making recommendations to the Government or sector regulators; (iv) a market investigation reference to the Competition Commission; and (v) enforcement action against companies suspected of breaching consumer or competition law.

The OFT has welcomed submissions on this topic from interested parties by Friday 1 June 2007 and intends to have completed its study by the end of the year.