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Public Accounts Committee on concessionary pricing of generic medicines

Warwick Smith, Director General of the British Generic Manufacturers Association (BGMA) has given evidence to Public Accounts Committee on concessionary pricing of generic medicines.
Following the hearing, Warwick Smith, said: “We welcomed the Public Accounts Committee’s interest in this area following on from the recent National Audit Office (NAO) report. We believe that the report brought clarity to the circumstances around the recent increase in the number of concessionary reimbursement prices for generic medicines.  
“All in the supply chain should be proud of the fact that despite two major, volume manufacturers not being able to supply medicines due to regulatory issues last year, patients were still able to access their medicines and other generic medicines manufacturers have now been able to step in and fill the gap. However, disruption to supply and production changes to meet the shortfall do inevitably lead to increased costs.
“However, notwithstanding the highly unusual size of this market disruption, we note that the average actual sales price of  over 800 products listed in Category M for which we have consistent data over the period rose from £0.93 in Q1 2017 to a peak of £1.13 in Q4 2017 during the period of most significant disruptions, falling to £0.99 in Q1 2018.

“Indeed, it is important to note that the price paid by the NHS for generic medicines is not that charged by manufacturers, but includes distribution costs and the retained margin for community pharmacy which is targeted to be £800m per annum. This means that typically, the reimbursement price of a generic medicine listed in Category M of the Drug Tariff may amount to approximately twice the manufacturer’s actual selling price (ASP). 
“The NAO Report also acknowledged that prices for UK generic medicines were lower than in comparator countries. Our own data shows that whilst there was a higher value of concessions in 2017 (£341m in 2017 v £75m in 2016) the actual average reimbursement price (including the effect of concessions) of a pack of generic medicines fell from £2.80 in 2016 to £2.46 overall in 2017. So, even during the period where high levels of concessionary prices were being set by the Department of Health and Social Care, the average cost to the NHS of generic medicines as a whole continued to fall.”