Friday, 19 July 2019

Brexit boost to pill-makers' profits

Just as Brexit did not on its own eviscerate Ford Europe or cause Deutsche Bank to embark on its current austerity programme, so the escalation in the price of pharmaceuticals was already under way before the June 2016 referendum. Phil Hammond, writing as MD in the current Private Eye, confirms there was rank profiteering. I quote extensively from his article. Two cases stand out.

The Competition and Markets Authority (CMA) found that from 2011 to 2015, Auden Mckenzie was the sole supplier of 20mg hydrocortisone tablets (the primary treatment for Addison's disease) and charges to the NHS rose from around £46 to £90 for a pack of 30 tablets, increasing the yearly bill to the NHS from £1.7m to £3.7m. The CMA has provisionally found that Auden Mckenzie was making monthly payments to its rival Waymade not to enter the market.

The CMA has also accused four drug companies of unlawfully colluding to increase the price of prochlorperazine, a drug used to treat nausea and dizziness, by 700% over four years. Alliance, Focus, Lexon and Medreich allegedly agreed not to compete to supply the 3mg tablets to the NHS, forcing a price hike from £6.49 a pack in 2013 to £51.68 in 2017.

In July 2018, the Department of Health was given new powers to predict and control the spiralling costs of generics, but the National Audit Office has not been convinced that the DoH knew how to use its powers.

Now Brexit has presented the industry with a splendid new weapon. Sterling has hit a 27-month low against the euro, causing price inflation and making the continental market more attractive to pharmaceutical suppliers. Nor is the NAO confident that the DoH would be able to safeguard medicine supplies if and when the UK leaves the EU. These failures affect us in Wales, because the control of the price of medicines is not devolved to this country, as it is to Scotland.

There appears to be little real competition between the companies which have sprung up in the last twenty years or so. The government must use the powers which parliament has given it. If these fail, then it must look seriously at setting up its own manufacturing facility to keep the private sector honest.

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