October For immediate release BGMA Dismisses Tendering for Reimbursement

							      24 October 2001: For immediate release



      BGMA Dismisses Tendering for Reimbursement of Generics
      “Tendering would increase the risk of medicine shortages and increase prices” –
      Warwick Smith, Director, BGMA

      In its formal response to the Department of Health’s Discussion Paper on Options for the
      Future Supply and Reimbursement of Generic Medicines, the British Generic
      Manufacturers Association has firmly rejected centralised purchasing by the NHS through
      a system of tendering as a means of setting the reimbursement price for generic medicines.
      This was one of three options put forward by the Government.

      In its response, the Association says that tendering would:

      •    Undermine the sustainability and stability of the generic market.
      •   Force concentration of the generic market, reducing competition, and leading to higher
          prices.
      •    Increase the risk of shortages.
      •   Increase disproportionately Government interference in the market and levels of cost
          and bureaucracy.
      •    Fail to meet the Government’s own objectives.

      The Association also says that it cannot support the existing arrangements with the
      continuation of the current maximum price scheme because the further changes that the
      Department of Health says that it would need to make to it are unclear; and because the
      maximum price scheme has already shown that it:

      •   Is an unnecessary and disproportionate intervention by the Government in the
          operation of the marketplace.
      •   Has reduced the responsiveness of the market so that generic market prices cannot
          react to market conditions.
      •   Has acted as a disincentive to manufacturers either extending their range of generic
          products, or entering the UK market at all.
      •    Would put at risk the significant savings to the NHS medicines bill that would
           normally be derived as a number of high value products lose their patent protection
           over the next two years.

      The Association says that it believes that the Department’s proposed Reference Based
      NHS Price Scheme could be made to work, but only if a large number of details are
      successfully clarified by the Department.




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Commenting on its submission, the Association’s Director, Warwick Smith, said:

        “The close of the consultation period on the Discussion Paper represents a
        significant milestone toward agreeing a new system of reimbursement, but there is
        a very long way to go yet if we are to agree a system which yields the significant
        benefits that the Government and patients have received from the operation of the
        Drug Tariff.

        “Generic prices in the UK are the lowest in Europe. And even during the market
        turbulence of 1999, the Tariff helped ensure that patients did not go without
        medicines, though certain features of it did lead to prices rising to levels which
        were unnecessarily high and sustained for too long.

        “The way forward is still unclear. It is essential that the Government continues to
        work with all in the supply chain to ensure that any changes do not upset the
        workings of a complex market.

        “This means ensuring that the system of reimbursement guarantees patients a
        continuing supply of low-cost, high-quality generics, and encourages generic
        manufacturers to launch new products as patent protection lapses.

        “Otherwise, the NHS will not recoup the very significant savings brought about by
        generic competition, and the impetus that that competition brings to the research-
        based industry to develop truly new products will be lost.

        “We will continue to work with the Department of Health to help achieve this.”



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Further information: Paul Duke 020 7838 4878

Notes for Editors:

The Department of Health released a Discussion Paper, “Options for the Future Supply and Reimbursement
of Generic Medicines for the NHS” in July 2001, seeking comments by Monday 22 October. The Discussion
Paper put forward three options for the reimbursement of generics:
• A reference-based NHS Price scheme.
• Central purchasing through tendering.
• Existing reimbursement arrangements coupled with the Maximum Price Scheme.
The publication of the Discussion Paper followed a Fundamental Review of the supply and reimbursement of
generic medicines carried out for the Department of Health by OXERA following the market turbulence in 1999.
The Department of Health will consult further on proposals for the reimbursement of generic medicines
following its consideration of responses to the Discussion Paper.