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UK Lawmakers Say Parallel Trade Causing Drug Shortages

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05/15/2012 | 02:28pm CEST

-- Parliamentary group says urgent action needed to end UK drug shortages

-- Blames European 'parallel trade' in medicines for drug shortages

-- Lawmakers say situation will worsen without corrective action

-- Says possible prohibition of drug exports needs to be considered

(Adds comment from group's chairman, the pharmaceutical industry, an analyst and background.)

    By Sten Stovall 

The U.K. is being drained of crucial medicines by exporters who sell them on elsewhere at higher prices, putting patients' well-being at risk, U.K. lawmakers said Tuesday.

Parliament's All-Party Pharmacy Group called on the coalition government to find effective ways to restrict this so-called parallel trade, which is legal under European Union law but has long been condemned by drug makers. In the past, drug makers have complained about cheap parallel imports flooding into the country.

"The parallel export of medicines intended for the U.K. market is undermining the effective functioning of the U.K. medicines supply chain, and putting patients' well-being at risk," the APPG said in its report.

It noted that while European law provides for the free movement of goods across borders within the E.U., there is also scope to exempt certain goods if their free movement threatens public health.

"We believe the government needs to consider the use of this exemption in the best interests of U.K. patients," the report said.

Supporters of parallel trade in medicines say that it helps stimulate competition and keep drug prices low across Europe while critics believe it disrupts supplies and prevents patients getting access to drugs at prices they can afford.

Pharmaceutical industry experts say a price gap on some medicines, fuelled by a relatively weak pound in the past and higher prices in parts of Europe compared with subsidized prescription charges in the U.K., is behind a shortage of some drugs. Medicines are exported elsewhere by middlemen such as wholesalers or pharmacies seeking quick, larger profits, meaning supplies can become exhausted quickly.

"The issue has become more acute thanks to the drug price cuts that have been pushed through in several European countries over the past three years, which have resulted in bigger disparities in prices - and therefore potentially higher profits for traders," said Ana Nicholls, healthcare analyst at the Economist Intelligence Unit.

Drug manufacturers have tried restrict the practice by imposing quota limits for some drugs in a bid to stop such exports. But the British lawmakers said such action has made the situation worse in the country by restricting the amount of drugs in the supply chain.

APPG Chairman Kevin Barron called on the government to act.

"Other countries experiencing the same problem are now looking into the possibility of prohibiting the export of medicines, and this government needs to urgently look at what they can learn from this," Barron said. In particular, the U.K. government must study the French government's recent proposal to effectively curtail the export of medicines, he added.

The lawmakers' report criticized the U.K.'s Department of Health and the Medicines and Healthcare products Regulatory Agency for poorly monitoring of the problem.

"The Medicines and Healthcare products Regulatory Agency has pledged to address shortages and to tackle those in the supply chain who are not meeting their obligations. However, beset by a lack of market-wide data the regulator does not even know which products are in shortage, much less by whom they are being exported."

"The Department of Health has also seemed reluctant to take action without having hard evidence that patients have been affected," it added.

A spokesperson for the Department of Health said the situation was difficult to monitor.

"There are nearly 900 million prescriptions dispensed a year, almost 11,000 community pharmacies and some 16,000 medicines, so some shortages and delivery delays are inevitable," the spokesperson said. "We will carefully consider the recommendations the All-Party Pharmacy Group make in their report."

The MHRA declined to comment but the U.K.'s pharmaceutical industry broadly welcomed the report's conclusions.

"We are satisfied that the APPG has acknowledged that diversion of U.K. medicines stock to other countries by a minority of pharmacists and other traders has created significant challenges for companies supplying medicines to U.K. patients, which must be addressed," a spokesperson for AstraZeneca PLC (AZN) said.

But Stephen Whitehead, who heads the Association of the British Pharmaceutical Industry, said the lawmakers' recommendations don't go far enough.

"Without the legal separation of pharmacy wholesaling and dispensing activities, the industry is unable to prioritize pharmacists whose primary concern is U.K. patients, over those who are selling medicines abroad for a profit and causing the problems in the supply chain," he said. "The pharmaceutical industry will continue to work closely with pharmacists, wholesalers, and the Department of Health to help improve this situation."

-By Sten Stovall, Dow Jones Newswires; +44 207 842 9292; sten.stovall@dowjones.com

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