By Jeremy Meader
The Labour government pledged to invest over half a billion pounds into life sciences manufacturing in July last year in a bid to eliminate the UK’s reliance on imported medicines.
While that could prove to be a future masterstroke, the state of play right now means the UK is mostly unattractive to manufacturers who prefer to take their product elsewhere.
In the UK today, approximately 50 percent of all medicines have a monthly treatment cost of less than a pound. Medicines that prevent patients from developing far more serious conditions are much cheaper than a can of Coke or a Mars bar!
Whilst the government has benefited significantly from generic prescribing, the cost of generics is now so low that the UK has become an unattractive market to global manufacturers and, it is UK patients that may suffer as a result.
It is not difficult to appreciate that if supply is limited, a manufacturer will be tempted to supply markets where they receive a higher price, rather than an extremely low price.
Lack of sustainable funding for pharmacies has seen most owners utilising a buying platform to try and reduce their monthly drug costs. Despite the rise of platforms margins have not improved.
At the same time, complexity has increased, with over 70 percent of independent pharmacies now having six or more wholesale suppliers. That results in more deliveries, more uncertainty over when stock will arrive and more returns. It is also not good for the environment.
The reality is that suppliers six and above are only supplying a tiny proportion of volume. Is this extra complexity worth the few pennies notionally saved?
That is not the only problem that exists. Ordering systems also encourage over and repeat ordering as soon as fears of a shortage, or rumours of one start. Demand can spike dramatically. Cost prices tend to increase.
Supply can switch dramatically because of these movements, making forecasting for both wholesalers and manufacturers a nightmare.
Pharmacy operators can very quickly see prices rise and then find the cost of buying the medicine is less than the reimbursement price from the NHS.
A pharmacy owner and let us face it, most are struggling to make ends meet, then faces the moral dilemma, do they supply the product, knowing it is going to be losing them money, or send the patient to another pharmacy, probably a national chain?
Aspirin costs have recently spiked - meaning pharmacies may have been losing around £2 on each pack dispensed, the projected impact being as much as £10m.
The concessionary pricing mechanism needs to be overhauled and speeded up to restore the sector’s trust and to prevent such losses being as dramatic, on top of a contract that is already unsustainable.
Whilst pharmacies chase the lowest price, wholesalers are fighting to hold volume, with margins tumbling and covering the cost to serve becoming a major challenge.
Manufacturers are coming under pressure to supply below cost, again to hold volume and share. They face the choice of sustaining a loss or exiting certain products, which in turn can result in further shortages as the market adjusts.
Nobody is winning in this situation, pharmacies, wholesalers, and manufacturers are all forced to make tough decisions.
But this then asks the ultimate question for those of us in pharmacy - who suffers most in this pricing environment?
Answer: Patients.
And it is not just aspirin. There is concern across the industry that other shortages could be around the corner, as the UK grapples with its supply and demand fluctuations.
As with many issues in medicine, it is difficult to keep global politics out of the story entirely and US president Trump’s continued insistence that the UK raises prices in the pharmaceutical field only grows with every passing day.
We witnessed last September how weight management products increased in price after a scolding from across the Atlantic.
But how best to try and deal with manufacturers in the US where they have direct-to-consumer models and Ozempic advertised during the Superbowl.
That will not be the UK model - nor should we aspire for it to be - instead, community pharmacy should aim to continue helping patients access the medication they require.
The Government must ensure its pledged investment is provided as soon as possible to ensure headaches over aspirin and other shortages and price spikes are less of a problem for tomorrow.
More money should be invested to encourage British manufacturing of medicines.
This will ensure a brighter future for the sector - meaning patients can be catered for, no matter what the product, at a local pharmacy.
(Jeremy Meader is Chief Wholesale Officer, Bestway Healthcare)
