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

Sanchez Manning
Monday 15 July 2013 07:47 BST
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
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 (Getty)

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”.

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