This is the latest volley in an escalating war. The Office of Fair Trading opened a probe today after receiving complaints from doctors, pharmacists and wholesalers in the wake of a recent deal in which Pfizer broached common practice and last month shifted its supplies to just one distributor - Alliance Boots’ UniChem.

Until then, Pfizer did what other drugmakers do, which is distribute its meds through doctors, pharmacists and hospitals. With a 15 percent share of the UK market, the move prompted charges that it was anti-competitive and prices would rise. In the past month, AstraZeneca and Novartis initiated plans to follow suit. Lilly may do the same.

“This is an important market study in one of the OFT’s priority sectors. Recent changes in the distribution arrangements for some medicines have caused great concern to many in the market,” says Ann Pope, the OFT director of markets and projects. “It is important for us to understand the likely impact of these changes on patients and costs to the NHS.”

The National Health Service spends nearly $20 billion a year on meds. In February, the OFT issued a report saying that was too much and urged greater use of generics and caps on profits of branded meds. At the very same time, Pfizer explained its distribution shift as a way to discourage counterfeiting, but other wholesalers charge the drugmaker was trying to eliminate parallel trade, which is legal in Europe. In other words, the real issue for Pfizer has been pricing.

And in fact, Pifzer blamed 250 UK job cuts in Janaury on the NHS. “This shift away from prescription of new, more effective medicines - in particular, the pressure applied by the Department of Health to switch the majority of UK patients to generic statins - has caused Pfizer to reconsider the number of roles required to support the UK business.” Big pharma’s UK trade group also threatened that research jobs would dry up if caps were enacted.

The OFT, which will report back by year’s end, says a specific investigation into the Pfizer deal isn’t ”appropriate at this stage,” but didn’t rule it out. Indeed, this jousting will escalate as big pharma attempts to force changes in the UK system. This will be just as volatile as the skirmishes in the US over pricing and another test of the epic struggle between governments and industry over the best system for providing affordable medicine and profits.

Further reading….
OFT statement;
OFT’s reasons for its probe;
An article in The Guardian this morning;
A story last month in The Guardian;
OFT report on drug pricing.[tags]Pfizer, UK Office Of Fair Trading, Wholesalers[/tags]