01 March 2007 | Antony Barton
The Department of Health (DH) has been forced to defend itself from criticism about overspending on drugs and unfair procurement practice.
A report from the Office of Fair Trading (OFT) reveals that the NHS spends about £8 billion a year on branded prescription medicines. It says some drugs prescribed in large volumes are up to 10 times more expensive than substitute treatments with similar benefits.
The OFT proposed changes to the pricing scheme, agreed between DH and the Association of the British Pharmaceutical Industry, which would release an extra £500 million in spend.
In a statement, DH said: "It is important we give value for money to the taxpayer. However, we recognise the importance of the pharmaceutical industry to healthcare and it is in all of our interests to encourage research and reward innovation."
DH has also been attacked for not showing due frugality elsewhere. The National Audit Office criticised the department last month for failing to show that it considered value for money when it selected data company Dr Foster for a joint venture with its Information Centre in 2005. DH paid £12 million for a 50 per cent stake in the venture, of which £7.6 million went straight to Dr Foster.
As well as doubting the venture's value for money, the report says: "By not going out to tender or advertising the opportunity to the market, the Department and the Information Centre entered into a transaction that carries the risk of legal challenge."
A spokesman for DH and the Information Centre said they sought appropriate legal and professional advice about the joint venture.
A procurement officer for the NHS, who wished to remain anonymous, told SM that allegations of overspending by DH came as a shock when he considered the value achieved through NHS buying. He said: "All our contracts go out to tender in line with EU regulations and there are always processes in place to ensure we get the best prices. Either these reports are off the mark or there is a huge discrepancy somewhere in the health service."
Last month, Britain's largest trade union, Unison, called for an investigation into some of the huge profits made by private companies through the health service. Third-quarter results for the NHS revealed that over a third of NHS Trusts, Primary Care Trusts and Strategic Health Authorities expect to be in debt by the end of this financial year.
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