Is the NHS being held to ransom by big pharma?
L ate last year Britain’s competition watchdog slapped a record £90m worth of fines on US drugs giant Pfizer, and British manufacturer Flynn, for jacking up the price of an anti-epilepsy pill by more than 2,000pc.
To critics of big pharma, it was a clear and egregious example of “price gouging” – hiking the price of a product in a market you dominate in order to rake in big profits.
But for Pfizer and Flynn – who embark on an appeal against the decision later this month – it was a justified increase to ensure continued supply of a drug they claim had previously been loss-making.
As the arguments are heard at the Competition Appeal Tribunal in the coming weeks, it will once again shine an uncomfortable light on the tension between drug makers and the health service over rising medicine prices.
But one place this battle will not be played out is at the High Court, after it this week threw out a judicial review challenge by industry trade body the Association of the British Pharmaceutical Industry (ABPI) against NHS drug pricing powers.
T hese powers enable the health service to ration the use of medicines expected to cost more than £20m in any of their first three years of use – something the ABPI complained would limit patients’ access to cutting-edge treatments.
H owever the challenge came to nothing and the ABPI said it would not appeal against the decision. None the less, both clashes bring into sharp focus the question of whether patients get a fair deal on drug prices. Is big pharma ripping us off? Or should we spend more on drugs?
It’s an issue that divides drug firms and policymakers. The industry points to various indicators suggesting British patients are getting a raw deal as public bodies try to save on the nation’s £15bn medicines bill while arguably not prioritising access to the latest life-saving therapies.
Dr Richard Torbett, executive director of the ABPI, says: “If we look at comparable countries, Britain pays some of the lowest prices for medicines but has some of the lowest access – meaning patients ultimately miss out.” The Government’s own competitiveness indicators show that for every 100 patients in France, Spain and Germany that get access to a medicine in the first year after approval, just 18 get it in the UK.
Meanwhile, the ABPI’s cancer comparator report in July, endorsed by Cancer Research UK, found that on average British patients had lower levels of access to six leading cancer medicines than EU counterparts.
D rug makers say they also have an agreed system in place with the Department of Health to cap increases in the lion’s share of NHS’s overall branded medicines bill to no more than 1.1pc a year. The system has resulted in more than £2bn being rebated since 2014. But it does not cover all medicines and is up for renewal in early 2019.
C rucially it also does not cover so-called “generic medicines”, where a drug’s patent has run out, allowing firms to increase its price through a process known as “debranding”.
Noel Wardle, at law firm Charles Russell Speechly, believes the “debranding” process lets the sector down. “If you view the market as a whole then the NHS gets a good deal in terms of medicine prices,” he says.
“But there are anomalies that create headlines and cause concern where money is spent unnecessarily.”
It was a generic drug, anti-epilepsy medicine Epanutin, that got Pfizer and Flynn in hot water with the Competition and Markets Authority (CMA). Once a patent has run out, a loophole in regulations allows firms to work with a distribution partner to rebrand it and increase its price.
The price of Epatunin, phenytoin sodium capsules used to control seizures in 50,000 patients, went from £2.83 per pack to £67.50 overnight.
I n a year the NHS’s bill for the same product leapt from £2m to £50m when all that changed was the name and the method of distribution.
Pfizer is committed to appealing against “all aspects” of the CMA decision but declined to go into detail.
The US firm stressed the drug had been “a loss-making product” and the deal with Flynn “represented an opportunity to secure ongoing supply of an important medicine for patients with epilepsy, while maintaining continuity of supply”.
I t also said the retail price for Epatunin was set at up to 40pc less than an equivalent product, although the hard tablet form indicated, critics say, is not a strict equivalent given doctors are reluctant to change prescriptions to even different forms of the same drug for epilepsy sufferers given the delicate brain chemistry at play. Flynn declined to comment.
The CMA fines for Pfizer and Flynn came ahead of a change in law in April designed to help close the loophole.
Once enforced, it will make firms submit detailed figures for how much it costs to manufacture a drug and the profit being made on it, with government given powers to claw back profits it deems as excessive.
But its implementation has been delayed due to lack of parliamentary time following the snap election, summer recess and party conference season. A consultation is finally expected to begin next month ahead of the powers starting in early 2018.
In the meantime, the Sunday Telegraph has seen evidence that the practice of steep drug price rises through the “debranding” route is still happening. Ben Merriman, a pharmacist from Cumbria who sits on a local NHS commissioning group, says he has identified around 90 drugs over the last few years that have had steep price increases through debranding that he believes were for “no good reason whatsoever”.
“The practice is still going on and it’s a big issue costing the NHS hundreds of millions of pounds a year,” he says.
C harles Russell Speechly’s Wardle says the problem with “debranding” price hikes is that firms can get away with price increases where they effectively hold a monopoly on that therapy area. “There’s not usually the competitive tension that drives down prices. So they can inflate the price of these products.” He says the new regulations coming through “will have teeth” but acknowledges there is a risk the transparency regime could be open to manipulation due to its reliance on firms disclosing cost and profit figures. On the wider picture of overall and branded drug prices the debate will rage on. The ABPI said this week after its High Court challenge fell through that working with government and the NHS “we must now focus on finding real, workable solutions to help NHS patients get fast access to the medicines they need”.
But the backdrop is of rising costs for next generation treatments, including personalised and genetic therapies for diseases like cancer, putting potentially more pressure on the health service.
Policy specialists point to studies suggesting the NHS already pays excessively for drugs, including a University of York research paper two years ago that concluded the health service should get better value.
D rug pricing pressure is an issue that’s here to stay. But the Government has a chance to help stamp out “price gouging” if it can only roll-out the new powers it has decided on quickly.