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Impossible to explain wholesalers’ generics margin rise, government hears

By Léa Legraien

13 Jul 2018

The Department of Health and Social Care (DHSC) cannot explain what government auditors last month described as an ‘unprecedented rise’ in wholesalers’ margins, it has said.

Speaking before the Public Account Committee (PAC) last week (4 July), DHSC chief commercial officer Steve Oldfield said that there is ‘no concrete evidence’ accounting for the rise seen in wholesalers’ margins in 2017.

His comments were made during oral evidence on an investigation into NHS spending on generic medicines in primary care.

Last month, Government auditors the National Audit Office (NAO) published a report, which found ‘significant increases’ in the prices of certain generics.


‘No concrete evidence’


Mr Oldfield said: ‘I don’t think we have any concrete evidence that wholesalers’ margins were increasing in a way that we could entirely explain […].

‘The circumstances that came together [last year] created a huge amount of turbulence and confusion in the market.

‘It is entirely possible that in that there was a disconnect between different parts of the supply chain.’


‘Saving money’


Imperial College’s medical education deputy director Professor Karim Meeran – also speaking before the PAC – argued that some of the generics should be made in the UK to save money.

He said: ‘If you have 10 drugs, of which nine cost £1 and one costs £600, it’s the £600 drug that will have the major effect on our mean spend.

‘All of the drugs on that list should be very cheap to make. We should look at whether we can make it within the health service and have a body that makes it, and not to make a loss but to break even.

‘If the NHS did all the manufacturing of just those essential drugs — not new drugs or developing new things but just that small list — I think we could save money.’

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