1670 per cent mark-up on NHS medicines slammed by health charity
The British Association of Dermatologists is urging the government to revisit a policy that allows certain medicines prescribed by GPs to cost up to 17 times more than the same drugs prescribed in hospitals, needlessly wasting the NHS millions of pounds each year.
Most drugs prescribed by doctors are ‘licensed’ medicines which have been approved for sale in the UK. When suitable licensed medicines are not available, the Medicines Act allows doctors to prescribe unlicensed medicines. For many common skin diseases including psoriasis and eczema, the range of licensed medicines is limited. As a result, doctors rely greatly on unlicensed creams and ointments, known as special-order medicines, or ‘Specials’. Such medicines are commonplace in dermatology - the British Association of Dermatologists (BAD), for example, recommends 39 Specials for use in skin disease treatment.*
However, the BAD has learnt that prices for Specials when prescribed in the community, as opposed to in hospital, are up to 1670 per cent, or 17 times, higher than the same drugs for secondary (hospital) care patients. This huge cost to the NHS is resulting in patients being denied access to treatment, as GPs and the Clinical Commissioning Groups who oversee them are unable to justify such high costs. And the problem is not limited to dermatological Specials, with medicines for other disease areas also being prescribed at greatly inflated prices.
Specials on the Drugs Tariff
In England, when a community pharmacist supplies a patient with a medicine that has been prescribed by a GP, the pharmacist receives a payment from the NHS for this drug. The amount they receive is a set amount, specified in the ‘NHS Drug Tariff’,1 and nine of the dermatology Specials on the BAD’s recommended list of 39 are listed on this Tariff.
The price set out in this Tariff has been decided by the Department of Health, based on an average of costings provided only by members of the Association of Pharmaceutical Specials Manufacturers (APSM), all of whom are private companies, and the Tariff price does not take into account much cheaper quotes from NHS manufacturers. 2
However, the majority of dermatology Specials are made within NHS hospitals, by hospital manufacturing units, who provide Specials to the NHS at prices reflecting lower manufacturing costs. Among the reasons for the lower costs is the fact that these units are able to produce the medicines in large batches. Conversely, APSM members provide the same drugs at far higher prices, in part due to the bespoke, non-batch approach to the manufacturing.
This system means that in England, Wales and Northern Ireland, a whole-of-market quote has not been obtained for Specials, leading to excessively high prices charged to the NHS for these drugs.
Regardless of where a community pharmacist sources a Special medication from - be it a costly version from a private company or a cheaper version from an NHS manufacturing unit - the pharmacist receives the same reimbursement from the NHS as defined by the Tariff, allowing for large profit margins.
For example, one treatment used for psoriasis, coal tar 10% ointment, is listed in the Tariff3 at £274.27, an item which is available from an NHS Specials manufacturer for £15.49 (a 17-fold increase, or an increase of 1670%). Even allowing for some margin and procurement costs for supplying community pharmacists, a mark-up of £258.78 on an item costing £15.49 is wildly excessive. Salicylic acid 20% ointment (used to treat hard skin build-up in skin disease) is available for £27.25 from NHS manufacturers but has gone on Tariff at £246.93 (806% increase), while another medicine, salicylic acid 2% / sulfur 2% in aqueous cream, is available at £28.68 but has gone on Tariff at £215.85 (652% increase).
In Scotland, NHS Tariff prices are far lower, for example 5% coal tar ointment, used to treat psoriasis, is on the Scottish Tariff at £26.47 and on the English Tariff at £231.28, while 2% eosin solution (used for skin infections in leg ulcers) is listed at £27.60 versus £229.13 in England.
Dr Deirdre Buckley, Chairman of the Specials Working Group of the British Association of Dermatologists said: “The tariff-setting system used by the Department of Health in England relies on an arrangement with the APSM, a body representing only private manufacturers, rather than a mixture of NHS and private. An average of prices paid to members of the APSM, which are much higher than NHS manufacturers’ quotes, are used by the DH to decide the NHS Tariff price.
“The margins of over a thousand per cent attached to NHS Dermatology Special medicines during the Department of Health's tariff-setting process seem wildly excessive. It appears to us that the taxpayer is being overcharged for the sole benefit of community pharmacists and some private Specials pharmaceutical manufacturers, or more worryingly, our patients are denied the medications they need because they are too expensive.”
The British Association of Dermatologists acknowledges that the current tariff-setting process, put in place by the Department of Health in 2011, has led to savings for the NHS, but is asking the government to review the process in light of the highlighted issues, and to ensure further cost savings by including NHS manufacturing units in the equation.
Chief Executive of the Psoriasis Association Helen McAteer said: “The inflated cost of special-order medicines has effectively removed them as a much needed treatment option for people with psoriasis. Unfortunately, we have received reports of patients being made to feel guilty about the cost of their requested treatment, which can result in them disengaging from the health service – further isolating people with long-term skin conditions.”
About skin disease
Skin diseases are extremely common. In fact, skin conditions are the most frequent reason for people to consult their GP with a new problem, and around a quarter of the population in England and Wales visit their GP with a skin problem each year. Skin diseases represent 34 per cent of disease in children, with atopic eczema affecting one in five infants. Hand eczema is one of the most common reasons for disablement benefit in the UK. Inflammatory skin diseases are disabling, disfiguring and distressing and reduce quality of life. In the UK, DALYs (Disability Life-Adjusted Years) for skin conditions are as high as those for diabetes, chronic renal disease, gastrointestinal disorders and neonatal abnormalities.4
In dermatology alone over 3819 Dermatology Specials were prescribed in the last quarter (to June 2015). We estimate that the NHS could save around £2million a year if dermatology items listed on Tariff were obtained from NHS manufacturers.
*The British Association of Dermatologists' updated list of preferred unlicensed dermatological preparations ('Specials')
1 Drug tariff link: http://www.drugtariff.nhsbsa.nhs.uk/#/00252860-FA/FA00251910/Part VIIIB - Arrangements for payment for Specials and Imported Unlicensed Medicines
2 “Part VIIIB of the Drug Tariff (the ‘Specials Tariff’) is a tariff of high volume and high cost unlicensed specials and imports, with set reimbursement prices. The prices are set by analysis of a selection of unlicensed specials manufacturer’s prices, with a margin included for pharmacy purchase profit” (source: Pharmaceutical Services Negotiating Committee). Data on the number of sales and the prices paid by community pharmacies for Specials during the previous quarter are sought from APSM members only, not from NHS pharmacies.
3 At the time of writing. Prices may fluctuate as the Tariff is updated monthly.
4 Skin disease statistics available from ‘Skin Diseases in the UK: a health care needs assessment’: https://www.nottingham.ac.uk/research/groups/cebd/documents/hcnaskinconditionsuk2009.pdf
Notes to editors:
For more information, please contact: British Association of Dermatologists, Communications Team, 0207 391 6094 (Monday to Friday) or firstname.lastname@example.org, Website: www.bad.org.uk
The British Association of Dermatologists is the central association of practising UK dermatologists. Our aim is to continually improve the treatment and understanding of skin disease.
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