13 December 2007 | Andy Allen
The NHS may have to pay millions of pounds more for prescribed drugs because of changes in the way they are distributed to retail pharmacies, the Office of Fair Trading (OFT) has warned.
The OFT expressed "significant fears" that "direct to pharmacy" (DTP) distribution deals could harm competition, adding hundreds of millions of pounds a year to NHS bills.
Pfizer's exclusive distribution agreement with UniChem is one such deal that has come under fire.
Under traditional distribution systems warehouses compete to supply pharmacies, usually offering discounts to secure business. According to the OFT, discounts on list prices typically amount to just over 10 per cent. Under the new system, distribution would be restricted to one channel.
The regulator said DTP agreements could bring about efficiency savings and firms should be free to choose their own distribution methods. But it has urged the Department of Health to examine ways of ensuring it does not pay more for drugs.
Pfizer has said the changes in its distribution system are intended to address concerns about fake medicines and that the new system will not increase costs.