Policy vacuum threatens future NHS savings

Please note that views expressed in guest articles on our website are the authors' own and do not necessarily reflect the views of the Nuffield Trust.

When it comes to medicine shortages, the sad reality is that our members believe that government policy issues contribute to the current record number of products facing supply problems.

According to our monthly medicines dashboard, collated using NHS England and Department of Health & Social Care data, the number of medicines facing supply issues roughly doubled in the last year. This increase in shortages is not a one-off spike but a growing and sustained problem founded on many factors, and impacting the supply of antibiotics and affecting patients with conditions such as diabetes, Parkinson's, ADHD, asthma, multiple sclerosis, HRT and TB. Many treatment areas have seen issues connected to supply lasting many months, if not longer.

Four out of five prescription drugs used by NHS patients are generic or biosimilar. When the initial version of a drug loses patent protection, off-patent equivalents bring competition and plurality of supply. As a result, the NHS goes from paying one supplier to having multiple competing options, reducing the price of the drug by 70-90%.

Every year, generics and biosimilars save the NHS over £16 billion via the competitive market, meaning the UK has enjoyed the lowest medicine prices in Europe. Affordable prices also enable more patients to be treated, which widens access. In addition, the multiple manufacturers entering the market to supply a drug when it loses its patent increases supply security.

Those benefits looking vulnerable

Unfortunately, these benefits enjoyed by the NHS are looking increasingly vulnerable. Our members tell us that ongoing shortages result from the lack of supportive government policy for generic medicines.

The off-patent medicine industry thrives on simplicity and ease of access – it is a high-volume industry that survives on razor-thin margins. The medications we are prescribed in the UK rely on global supply chains, and regulation must not make things unnecessarily burdensome. Yet international manufacturers are finding the UK an increasingly complex and costly place to do business.

Leaving the EU with only the UK-EU Trade and Cooperation Agreement (TCA) to smoothe trade relations has worsened matters. It is impeding investment in UK manufacturing – 7,000 jobs have been lost in UK medicine manufacturing since the TCA. This is because the agreement means medicines made and batch tested here are not accepted on the continent. The result has seen nearly 40 maufacturing sites upgraded or created in recent years in Europe and none here. Domestic manufacturing is an important element of the shortages solution.

In addition, crucially since the agreement, the UK has had to compete on its own for its allocation of medicines. Therefore, the UK's policy environment needs to be conducive to supplying the NHS with generic medicines.

Government pricing policy for branded drugs is a prime example which impacts many off-patent products and has recently been highly volatile. This volatility culminated in a 26.5% tax rate imposed on branded drug sales last year. While a new pricing deal has been agreed that recognises that competition delivers more affordable prices, the government’s decision to exclude generic manufacturers from discussions damaged the global generic industry’s attitudes towards the UK. This damage was particularly unhelpful as generic manufacturers have been increasingly finding the UK commercially unviable and allocating stock elsewhere. Unfortunately, the government exacerbated this problem by failing to reply to communications from the generic industry's global leaders during the pricing negotiations, harming global boardroom sentiment regarding the UK. This situation has been a significant contributor to the current level of shortages.

The medicines regulator, the MHRA, has been battling to reduce a massive backlog of generic medicines to license, caused by the agency's budget reductions. Consequently, waiting times have increased from around a year to more than two years, and generic manufacturers have become frustrated at the inability to supply their medicines to the NHS. Some of these products would have been given new licences to support medicines experiencing longer-term shortages.

The current government's Life Sciences Vision fails to mention off-patent medicines, despite them fulfilling the vast majority of prescriptions. In the next five years, some 255 patented products will lose their monopoly status and face competition from generics and biosimilars. Based on current levels of competition, this could generate £18 billion of additional savings for the NHS. When added to the current annual savings, the government could achieve savings of between £80 billion and £98 billion for the NHS from generics and biosimilars over the next five years. This would be an enormous prize for the NHS. However, it is under threat due to the current policy environment in the UK.

Predictably, the lack of supportive policy for the UK generics industry has increased medicine shortages. The rise of supply issues is in part due to an underestimation by some in government of the importance of generic medicines to the NHS.

Urgent action needed

The recent Nuffield Trust report summarises the shortages issue, highlighting that shortages are becoming commonplace and part of the new normal. While, sadly, this is true, it does not make it acceptable, and we need urgent action to address the situation.

Whichever political party wins the election, the next government needs to understand the critical importance of the off-patent medicines sector. Shortages are the tip of an iceberg representing a broader set of problems, which – unless the government addresses them – risk the UK becoming increasingly deprioritised as a supply destination. And that would be terrible for patients.

Mark Samuels is the Chief Executive of the British Generic Manufacturers Association (BGMA).

Please note that views expressed in guest articles on our website are the authors' own and do not necessarily reflect the views of the Nuffield Trust.

You can read here the recent Nuffield Trust report on the impact of the UK’s decision to leave the EU on the supply of products needed for health, life sciences, migration and the health and care workforce.