The government and pharmaceutical companies agreed a new five-year pricing deal under the Pharmaceutical Price Regulation Scheme (PPRS) in November. The new arrangements, which came into effect on January 1, will introduce a fixed limit on NHS spend on branded medicines for the first time ever, with additional expenditure above this level funded by the industry.

NHS spending on branded medicines – more than £12bn in 2011/12 – will remain flat for two years, followed by small increases of less than 2 per cent in the following three years. This compares to an average growth of 5 per cent in previous years.

Although the PPRS only applies to branded medicines, it has ramifications for the generics market, too. The British Generic Manufacturers’ Association (BGMA) welcomed the agreement. “The UK medicines industry is extremely efficient, providing patients with a stable supply of affordable and accessible medicines throughout their life cycle,” says Warwick Smith, BGMA director general. “The mature competitive generic market in the UK already saves the NHS £11bn a year and provides important headroom to allow further investment into the uptake of new medicines.”

PSNC is studying the detail of the new PPRS, but it does not expect contractors to face the problems caused in the past by price cuts taking effect on January 1. This had led PSNC to negotiate a price concession for January in previous years. “However, we will need to consider the scheme’s impact carefully, and look specifically at the elements of greatest concern to contractors, including price modulation and the likely impact on pharmacies’ ability to obtain medicines they need for patients swiftly and without punitive financial terms,” says Sue Sharpe, PSNC’s chief executive.

But whatever happens to the market for branded medicines, the generic medicines industry’s core roles were ensuring that patients have access to affordable medicines and in driving innovation, Mr Smith told the European Generics Association (EGA) industrial policy conference in October. “The reason we exist is to ensure increasedaccess to medicines while providing cost savings. We also drive innovation by competing with established originator drugs. We are the engine room behind a virtuous circle of innovation and cost containment – that’s our mission.”

With the right commercial and regulatory environment the industry should continue to grow, said Mr Smith, but this was a means to continuing to provide important access to medicines. If the industry did not thrive, it would not succeed in its mission and patients would be denied medicines as a result, he warned.

Supply issues

A number of generic shortages are making it hard for contractors to source certain lines, and the situation does not look like improving “any time soon”, says Sundeep Nagra, Numark’s commercial manager. The Medicines and Healthcare products Regulatory Agency (MHRA) has withdrawn its regulatory approval from the manufacturing facilities of certain companies, such as Wockhardt, which is having a knock-on effect in the market. And, to make matters worse, some pharmacies are stocking up on a lot of the cheaper generic molecules, causing additional shortages.

The Department of Health has been granting price concessions for products in short supply since February, rather than granting them NCSO status. This is an improvement because pharmacists don’t have to remember all the requirements for NCSO endorsement and risk losing out financially.

But this is still not ideal, says Mr Nagra, as they have to wait until the middle of the month before discovering which products have been granted a concession. There are sometimes differences in what is granted ‘item in short supply’ status or adjusted price in Scotland, and price concession in England, which can also be confusing, he says. “We must develop a more transparent, quicker and fairer system – PSNC have been talking about putting a new system in place for a while now but nothing has appeared yet.”

Shortages are making it hard for contractors to maintain brand continuity for patients, creating potential safety issues. This is a particular issue for drugs with narrow therapeutic index, such as those used in epilepsy. The MHRA recently divided antiepileptic drugs into three risk-based categories to help healthcare professionals decide on the relative importance of maintaining continuity of supply of a specific brand. But supply issues could make the situation more complicated.

Patient safety should always come first and pharmacists should abide by the new guidelines, says Mr Nagra. “It may mean more work for pharmacists to ensure continuity of supply and they will need to discuss this with the prescriber and patient when they cannot get the same medication.” Numark will be issuing a CPD module for members to help them understand these changes. Pharmacists do not currently get funded for this extra cost, but it is something that needs to be looked at, says Mr Nagra.

Continued focus from Cambrian

Pharmacists have numerous buying groups to choose from when it comes to generics, yet one in particular seems to be going from strength to strength despite the competition and difficult economic conditions. Chairman of Cambrian Alliance, Mark Griffiths explains the group’s secret: “Our success is based upon our continued focus on improving the financial and operational performance of our members. We also strongly believe in regular personal contact with members and have a team of 10 dedicated business managers that live in the area they work in.” This means that they know the demographic and the challenges that their members face on a daily basis.

The range of benefits on offer from Cambrian Alliance has helped membership grow to around 900 over the past 12 years. The group puts more than 5,000 lines out to tender every month, ensuring the best possible deals on all lines, not just the top 50.

Buying has been made even easier for members since the introduction of the electronic Cambrian Alliance Supplier Selector (eCASS). This automatically selects the best deals on all products, with members reporting increased profitability as well as the freeing up of precious time. “I believe that this focus has helped us to maintain our standing within the profession and gives our members peace of mind that our time and effort is concentrated solely on making life easier and more profitable for them.”

Mr Griffiths predicts pressure on margins for years to come. “Therefore it’s vital that we do not stand still.” Cambrian is continually adjusting its business model to ensure it moves with the times and reflects the economic landscape. “We will continue to identify new opportunities for members and will help our members meet what can often be very complex and challenging demands. It’s about staying ahead of the game for us and our members.”

What's INN a name?

The EGA has expressed concerns that the current World Health Organisation (WHO) International Non-proprietary Names (INN) system runs the risk of being dismantled by the discussion around biosimilar medicines. To prevent this from happening, the EGA has proposed that all biosimilar products should be assigned the same INN as their reference product and a unique brand product name.

The BGMA agrees with its European colleagues on this issue. “The WHO INN system has proved to be a significant driver in the name harmonisation of active substances internationally, which has huge benefits to global public health, says Mr Smith. “We would not be in favour of anything which threatens to dismantle or destabilise this, which is a possibility with biosimilar products.”

Proposals to introduce a new naming convention with different INNs would create confusion, are likely to compromise patient safety and would limit patient access to biologics, warns Mr Smith. Furthermore, a new convention that discriminates against biosimilar medicines would also limit the realisation of substantial cost savings.</box>

 Accumulate with Actavis

Meanwhile, the big manufacturers offer contractors a number of buying schemes to help them maximise profit and free up time. One such scheme recently launched – Actavis’s Partner Pricing – has been “extremely well received” by community pharmacy, says Michael Cann, the company’s UK executive director for generics. The scheme has been designed following extensive research into the issues currently faced by community pharmacists, who fed back that they require transparency of generics pricing and simplicity of use.

The scheme therefore supports those pharmacy teams who wish to provide continuity of the Actavis brand to their patients, while protecting the pharmacy purchase profit, says Mr Cann. The other important feature of Partner Pricing is the retrospective adjustments to discounts for products that have a concessionary price set by the Department of Health, which can occur after the Partner or trade price has been set. This adjustment ensures that Partner Pricing pharmacies’ purchase profit is maintained on these specific products.

To qualify for Partner Pricing, a minimum level of purchases is required. The Accumulator Scheme remains popular with pharmacies that use a variety of generics suppliers, with stepped discounts supporting different levels of purchases.

Actavis continues to improve its broader offering, and including the Actavis OTC portfolio in both schemes is a “major step” forward to simplify arrangements and support community pharmacy. The OTC portfolio of 33 products provides a variety of brands including Cymex, Cymalon, and the “fast growing” Sominex.

The Actavis Academy now has almost 3,000 independent pharmacy users, and an integral part of this service is the ‘Ask Actavis’ facility available on its website. This online tool invites pharmacists and staff to ask questions relating to pertinent business issues including reimbursement, the NHS and HR problems.

Typical ‘Ask Actavis’ questions range from Drug Tariff or employment law enquiries, to requests for medicine specific information, industry updates or guidance with regards to national bodies. Actavis endeavours to respond within a 72 hour window and questions are answered by a team of experts working in partnership with the Actavis Academy.