NHS hit for millions by overcharging ‘scam’

Drug companies exploit loophole in the law to hike prices by as much as 2,000 per cent

Drugs companies have been accused of “highway robbery” of the NHS by using a legal loophole to push up the price of medicines in some cases by up to 2,000 per cent – at a cost to the taxpayer of tens of millions a year.

At least 15 drugs have substantially increased in price after being “flipped” from one firm to another, according to information obtained by doctors.

The legal “scam” has prompted outrage from the British Medical Association – which has warned that vital treatments risk being denied to patients if costs rise so much that the NHS can no longer afford them.

The controversial practice involves big-pharma firms selling on medicines commonly used by the NHS to businesses acting outside the Government’s price-regulation scheme. The purchasing firms are then free to mark up the prices they charge the NHS.

In one of the worst cases, the cost of an epilepsy drug prescribed to thousands of patients by the health service was increased by 24 times the original price. Meanwhile, testosterone patches given to both men and women suffering from hormone imbalances jumped from £26 per 300g to a £395 after being sold on. And the price of a medication used to treat mental-health problems such as anxiety and schizophrenia rocketed from around £4 per five millilitres to £23 – a mark-up of 607 per cent.

It is understood that at least 15 drugs currently being supplied to the NHS have seen their price tags increase substantially after being sold from one pharmaceutical firm to another.

The BMA has now called on the Government to take action to close the loophole, which is being exploited by some of the world’s biggest drug manufacturers.

They say that it could be costing the NHS and taxpayers up to an extra £100m per annum at a time when health budgets are being slashed. A motion was unanimously passed at the BMA’s annual meeting last month criticising the pharmaceutical industry for maximising their profits at the expense of patients’ access to drugs.

The Government attempts to hold down the price of drugs bought by the NHS through the Pharmaceutical Price Regulation Scheme (PPRS), under which the Department of Health negotiates what it considers a fair price for a patented medicine.

But increasingly, some large drug manufacturers are legally over-riding this arrangement through a loophole that allows them to sell the marketing rights to a treatment when its patent expires. The buyer is then able to rebrand the drug under a new name and sell it back to the NHS in a generic form at a vastly inflated price because it no longer falls under the PPRS agreement.

Dr Peter Holden, a senior member of the BMA, said: “This is the drug companies flipping the drugs over to another firm for personal gain and milking the NHS for more money. But the patient is also being inconvenienced because we may have to find another treatment.”

The biggest worries centre on the sale of the epilepsy drug Epanutin by its manufacturer Pfizer to another business, Flynn Pharma.

The medication, which is used by around 100,000 people across Britain, originally cost about 67p per 50mg. But after the sale this price shot up to almost £16 for the same amount, representing a 2,385 per cent increase.

It was estimated that this mark-up will force the NHS to spend an extra £50m per year on Epanutin – now renamed Phenytoin.

Dr Bill Beeby, chairman of the BMA’s clinical and prescribing committee, said companies such as Pfizer – one of the planet’s largest pharmaceutical firms, worth around £44bn – and the much smaller Flynn Pharma were committing “highway robbery”, although their actions are entirely legal. He said: “The epilepsy drug is particularly bad because it involves huge numbers of patients. We’re talking about thousands across the country. There are large numbers of patients who are stabilised on the epilepsy treatment and the effect of withdrawing it could be catastrophic.”

He added: “What the manufacturer has done is totally legal but you have to question what we define as legal.”

Sue Sharpe, chief executive of the pharmaceutical services negotiating committee which represents pharmacists, said: “We believe questions should be asked of manufacturers to explain significant price increases.”

The Department of Health said systems were in place to control the price the NHS pays for “most medicines”. But a spokeswoman admitted: “Some medicines fall outside these systems and we are working to see how the NHS can get a better deal on these products.”

A Pfizer spokesman said: “Medicine divestment can play a valuable role in ensuring that a medicine continues to be available to patients.

“In the case of Phenytoin Sodium Flynn Hard Capsules, since Pfizer does not hold the UK marketing authorisation and the rights to market and distribute this product in the UK, it is not appropriate for us to talk about this medicine or comment on another company’s pricing strategy.”

David Walters, director of Flynn Pharma, said: “I fully understand that any price increase is not good news for the NHS, but had we not managed to maintain Phenytoin capsules on the market, which would not have been possible at the old price, patients would have had to switch to other, more expensive formulations.”

He also insisted the drug was “competitively priced”.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Life and Style
life
Arts and Entertainment
Cold case: Aaron McCusker and Christopher Eccleston in ‘Fortitude’
tvReview: Sky Atlantic's ambitious new series Fortitude has begun with a feature-length special
Voices
Three people wearing masks depicting Ed Miliband, David Cameron and Nick Clegg
voicesPolitics is in the gutter – but there is an alternative, says Nigel Farage
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
News
i100
News
people
Sport
Chelsea manager Jose Mourinho
footballThe more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Life and Style
Vote green: Benoit Berenger at The Duke of Cambridge in London's Islington
food + drinkBanishes thoughts of soggy school dinners and turn over a new leaf
News
Joel Grey (left) poses next to a poster featuring his character in the film
peopleActor Joel Grey comes out at 82
News
i100
News
business
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Marketing & Sales Manager

£40000 per annum: Ashdown Group: A reputable organisation within the leisure i...

Tradewind Recruitment: Science Teacher

£90 - £140 per day: Tradewind Recruitment: I am currently working in partnersh...

Recruitment Genius: Doctors - Dubai - High "Tax Free" Earnings

£96000 - £200000 per annum: Recruitment Genius: Looking for a better earning p...

Recruitment Genius: PHP Developer

£32000 - £36000 per annum: Recruitment Genius: A rapidly expanding company in ...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee