Scope of the inquiry
Generic medications are medications that can be manufactured by any company. These differ from branded medicines, which are protected by patents for a minimum of 20 years. During 2017, costs of generic medicines rose unexpectedly, putting financial pressure on pharmacies.
A recent investigation by the National Audit Office found that the NHS spent £4.3 billion on generic medicines in 2016/17. Most of this was spent in primary care, where pharmacies buy medications from manufacturers and are reimbursed by the NHS according to set prices, called the Drug Tariff. If the cost of the medications is higher than the tariff, then the Department of Health and Social Care can set a concessionary price to allow for higher reimbursement.
In 2017/18, the NHS paid £315 million to pharmacies in concessionary prices because of prices increases. This is a sevenfold increase on 2016/17 concessionary spend. The NAO found that ten medicines represented half of this additional spend. For example, the peak concessionary price for common antipsychotic Quetiapine was £113.10; its previous set price was 70 times lower at £1.59.
Anaylsis by the Department of Health and Social Care has identified a range of responsible factors, including medicine shortages, currency fluctuations, and increases in wholesalers’ margins.
The Committee will take evidence from the Department of Health and Social Care, and NHS England, to ascertain what they are doing to control price increases and make sure that patients are protected from harm.