A controversial plan that changes the way prescription meds are distributed to patients by drugmakers could add millions of pounds to NHS drugs bills and result in longer waiting times for patients, The Times of London reports.

The Office of Fair Trading today published a report on the impact of a distribution deal between Pfizer, the world’s largest drug maker, which bypasses its traditional wholesale suppliers to sell directly to pharmacies through UniChem, the wholesaling arm of Alliance Boots. (Here is the report). The report said there is a “significant risk” of higher drugs cost to the tune of hundreds of millions of dollars annually to the UK’s National Health Service and any further use of exclusive distribution arrangements by industry may also lead to longer-term competition concerns (see the executive summary).

The DTP distribution allows a drugmaker to increase prices paid by pharmacies and to control the delivery for the distribution of their meds, the Times notes. However, the report found these plans may also may make distribution more efficient. But the OFT is recommending the government take several steps to avoid price increases. And to counteract the prospect of long waiting times for patients to receive meds, the agency suggests the government require drugmakers to adopt minimum service standards.

Pfizer’s so-called direct-to-pharmacy model has been attacked by independent pharmacists, members of Parliament and rival wholesalers, who argue that restricting the distribution of all Pfizer products to one UK supplier poses a threat to competition, drug pricing, patient welfare and the NHS. Smaller wholesalers and some docs say the tactic is really a bid to fight parallel trade, a legal practice in Europe in which meds can be imported for resale into the UK.

A Pfizer spokesman tells the Times: “Pfizer is pleased to note that the OFT report contains no recommendations for further action or referrals on competition grounds. The company welcomes the OFT’s acknowledgement that ’such schemes may also give rise to efficiencies in distribution’.” And Pfizer denies the DTP scheme increases the cost of medicine to the NHS.

A spokesman for Alliance Boots tells the paper that “we are extremely pleased that after 14 months of consultation with affected parties and the Government the OFT has found no grounds for interference with the Pfizer direct to pharmacy agreement…This decision has not changed anything. It’s business as usual.”

As previously reported, several other drugmakers including AstraZeneca, Eli Lilly and Novartis are considering similar distribution plans.

A spokesman for the Association of the British Pharmaceutical Industry tells the paper that “our concerns are not a million miles from those of the OFT. We would hope to see patient safety guaranteed, speed of service and supply chain security as an intrinsic part of whatever system companies choose to adopt.”

Today’s report follows on from the OFT’s recommendations announced in February to reform the Pharmaceutical Price Regulation Scheme. The NHS spends around $12 billion a year on branded meds dispensed by retail pharmacies.

John Fingleton, the OFT’s chief executive, said in a statement: ‘The changes to the distribution of medicines in the UK are among the most significant for many years and have given rise to real concerns. “Building on our suggested reform of the PPRS, further action is needed to prevent increases in NHS medicines costs and to ensure service standards pharmacies to patients are of a satisfactory standard.”

The Government now has 90 days to respond to the report, and a spokesman for the Department of Health declined to comment to the paper.

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