Is NHS Drug Pricing Broken?

A look inside your medicine bottle

Last Christmas, I ran out of the inexpensive medicine I had been taking on a fairly regular basis. As a matter of routine, I took my doctor’s prescription to the pharmacy. For complicated and longstanding reasons, I don’t use an NHS doctor. Normally, and this may surprise you, this means I get my medicine for far less than the NHS prescription fee, which currently stands at £8.60 unless you are a child, retired, or fit other criteria. However, in January 2017, my medicine had skyrocketed from around £5 to almost £20. Why might this be?

The answer to this question has taken nine months, and is still coming. I started my investigation my challenging the staff at the pharmacy. They had no idea why the medicine had risen so sharply in just a few weeks. All they could do was confirm the price on their computer was correct. Stunned, and knowing that the other nearest pharmacy was part of the same chain, I kept my receipt and decided to email the head office. Many painful emails (and days) later, they told me to stop writing to them, in a terse and error-riddled response which basically blamed the supplier. I had no confidence in the pharmacy, or their failure to offer any explanation, or to offer any kind of goodwill gesture of any kind. I turned instead to the manufacturer.

You will not be surprised to learn that the price explosion had nothing to do with the manufacturer. At least, not the one that made the actual medicine I was using. It is important at this stage to let you know that the medicine is a generic, which means it has long past its exotic sexy years when it makes its inventor a lot of money. It is now out to pension, still saving lives, but for small change.

At least, it was small change until January, then something went wrong. The problem, claimed my manufacturer, was another company, making the same drug, which had a problem which had caused a shortage. As a result, all NHS pharmacies were paying more for the drug, and therefore the NHS would pick up the bill. In my case, having side-stepped the NHS, I was on my own recognizance and would have to stump up the additional charges myself. I don’t mind taking the rough with the smooth. Having saved money for years, I didn’t mind a little increase here and there. But a 400% rocket? And I had no idea if or when the price would fall back again. Don’t worry, the manufacturer claimed, they always fall back. And yes, the price has now fallen back, but it took over 6 months to do so.

So if the pharmacy and the manufacturer are not to blame, who is? It turns out that this is more complex than I ever thought possible. In fact, the Department of Health is partly to blame. The pharmacy I used was a small local one, probably a lot like the one you use, and it is known by those in the healthcare field as a community pharmacy. Years ago we called these “chemists.”

Such smaller pharmacies have a lot of policies and prices that are set centrally by a body called the PSNC, the Pharmaceutical Services Negotiating Committee. It is every bit as dull as it sounds, but it has a lot of hidden power. One of the things it does is publish a list of drugs which are in short supply, and for which pharmacies can obtain a price concession. This means that when a supplier’s price increases, which can be for lots of reasons, including short supply, they price is added to this list. The pharmacy is refunded the new, increased amount, to cover them for the temporary price hike. My medicine was on this list from around December 2016 to around June 2017. You can see the current list of medicines on this list, and their current concession price right here.

If a medicine is on this list, it means that the normal cheap prices are not available, and the drug is given NCSO status. This stands, quite literally, for “No Cheaper Stock Obtainable” and it only applies for one month. However, you will see many medicines appear for several months at a stretch. The list is maintained by the Department of Health.

Some drugs on this list have eye-watering prices. Take one at random: Olanzapine, which has a current price for 20 mg doses of £110 per 28 tablets. Imagine needing this once a month! Better still, imagine how many millions the NHS must be spending on drugs which are in short supply. After nine months of writing to the Department of Health, we are still waiting to find out just how many millions it is, as well as answers to many other questions.

For now, our working assumption is that the manufacturer of one medicine could cause a national shortage that causes the price of all similar drugs to rise. Just like the tide that lifts all boats, a failure on one production line can cause domino effects. In my own case, this is exactly what happened. I only noticed the amazing, virtually hidden, price penalty lists because I was paying for my own tablets. If I had just instead paid the £8.60 NHS fee, such a shock would never have been noticed. But the astonishing appearance, which we are still investigating, is whether in fact a manufacturer could influence the national prices paid by the NHS by causing shortages in its own supply. We cannot yet find any downside to this, other than reputational, and nothing in the guidelines that would cause a penalty of some kind to be applied. Why, if a manufacturer fails and causes a shortage, shouldn’t that manufacturer be required to reimburse the NHS for the full amount itself? Such a punitive penalty might lead them to go to greater lengths to avoid a shortage again.

This story is still developing, but after 9 months of investigating, we had to summarise where we are today. We are getting answers, but only in a frustrating and transactional way. If you know anyone with detailed knowledge of medicine pricing in the UK, please let them make contact. We really want to get to the bottom of this story, and to understand if there are ways to improve the efficiency of the system for NHS patients.