Commercial – medicines supply chain

Pharmacist looking for medicine in a drawer

Each year the NHS issues around one billion prescriptions in the UK community. Around 13,000 pharmacies issue over 90% of these prescriptions, with the rest being issued by over 5,500 dispensing doctors.

Medicines are broadly supplied in two ways: firstly by manufacturers selling to wholesalers, who in turn sell them on to pharmacies and hospitals, and secondly by manufacturers selling direct to pharmacies and paying distributors or wholesalers a fixed fee for delivery.

Medicines are generally delivered on time, and as expected, but, although there is actually more than enough medicines supply to satisfy demand in the UK, there is still not enough getting through to the front line. This means that many medicines have to be delivered by emergency arrangements put in place by manufacturers. 

Medicines pricing key facts

  • In most EU countries, governments control medicines pricing, resulting in wide price variations, sometimes exacerbated by currency fluctuations
  • In the UK, companies set prices and their profits are regulated by the Government through the Pharmaceutical Price Regulation Scheme (PPRS), jointly negotiated by the pharmaceutical industry and Government
  • The UK currently has amongst the lowest prices in Europe, driven by a combination of UK and Euro currency exchange rate changes and successive price cuts jointly agreed by industry and Government under the PPRS
  • Due to current low UK prices, medicines intended for UK patients are being exported by intermediaries to other EU countries where they attract higher prices
  • This pricing discrepancy and the change in the exchange rate have created a financial incentive for some people within the supply chain to order extra medicines and sell them overseas for profit
  • IMS has estimated that around 10% of UK pharmacists are exporting medicines to other countries and that the value of exports is between £30–50 million per month 

The Government, along with key stakeholders in the industry, has taken a number of measures to strengthen the supply chain.

The pharmaceutical industry in the UK is committed to maintaining a reliable supply of medicines, and the ABPI is working to find a sustainable solution, for more information see Supply chain – working towards a solution.

To find out more about the PPRS visit Understanding the PPRS

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