Source: The Times (UK)
Contact: letters@thetimes.co.uk

Drug companies' loss leaders cost the NHS millions
By Ian Murray

DRUG companies are milking the National Health Service of hundreds of
millions of pounds a year by exploiting a severe shortage of hospital funds.

They sell expensive brandname products at huge discounts to hospitals,
knowing that patients insist on being prescribed the same drugs by their
GPs when they go home. The deal can save hospitals hundreds of thousands of
pounds on their drugs bill.

The local chemist, who cannot get discounts anything like as large as those
given to hospitals, has to pay much more for the same drug. Discounts vary
from place to place. Drugs dispensed in Kensington and Chelsea chemists
cost an average of £10.23; those in Sheffield cost £6.87. The NHS pays the
difference.

Much cheaper equivalent drugs are usually available, but the chemist cannot
substitute them if the doctor has named the expensive brand on the
prescription. Buying just 25 of the brandname drugs instead of their cheap
equivalents cost the NHS over £166 million last year. The national drug
bill rose 6.2 per cent in real terms last year to £4 billion, with 485
million prescriptions dispensed.

Laurance Buckman, a GP in Finchley, north London, said that it was common
practice for big companies to provide hospitals with drugs at huge
discounts. A member of the British Medical Association's negotiating team,
he is an expert on general practice audit.

"When you work in hospital you are barely aware of the price of drugs so
you don't mind which you prescribe," he said. "It is only when you work in
the community that you realise how extremely expensive the branded ones can
be."

Dr Buckman said that, in 62 per cent of his prescriptions, he named the
cheaper equivalent drugs, but he knew that whenever patients came out of
hospital he would probably have to put them on the drug prescribed for them
there. "Once you are in practice you are very aware of the cost of drugs
and you can get into trouble if you overprescribe. When a patient comes
and tells you the drug he was given by the consultant is doing him good it
is almost impossible to get him to agree to a change. It is no point
telling him that the cheaper one is just as good because he thinks he is
being fobbed off."

He said that major drug companies gave huge discounts to hospitals to make
sure their brand names became wellknown before the patents on the drugs
expired and to beat off competition. "It is not a scandal. These companies
are responsible for most of the research into new drugs and they are major
exporters which means that they contribute to the economy. They are not a
charity but a business and their shareholders expect them to make a profit."

Drug companies can retain a monopoly on drugs they patent for 15 years,
during which time they must try to recoup the cost of the research and
development on the drug. After that, any firm capable of producing the drug
can obtain a licence to do so and undercut the brandname product.

These generic producers are ready to flood the market with their version of
the brandname product on the day the patent expires. When Glaxo Wellcome's
ulcer cure Zantac lost its patent protection recently, competition among
generic producers to win a share of its market drove down the price of its
equivalent, ranitidine, by 25 per cent. Zantac, however, costing £27.89 for
60 tablets, retains a dominant share of the market.

Charitable donation is another way by which the big producers help to keep
their name at the forefront of doctors' minds, especially in hospitals.
Glaxo Wellcome has donated £1.75 million towards the construction of a
pharmacy unit at King's College Hospital in London. Since 1989 it has given
£13 million to healthrelated projects.

No strings are attached to such gifts. "We are committed to being a good
corporate citizen, helping to do things in the field where we work," a
spokesman said.

The system of discounts for the 4,000 doctors in rural areas who are
allowed to dispense is open to abuse and the Government has ordered an
inquiry into the way it works. The doctors provide a muchneeded service
for patients who would find difficulty going to a chemist for
prescriptions. Most of them are completely honest but they are exposed to
temptation.

Drugs companies are assumed to give them a 9.57 per cent discount for their
supplies, but in reality discounts for them are often as high as 30 per
cent. It is quite easy for them to pocket the difference. The NHS Executive
found evidence that some doctors had prescribed cheap generic equivalent
drugs but charged the NHS for the expensive branded names.

Copyright 1997 The Times Newspapers Limited