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Branded Generics

In some parts of the country, branded prescribing is a key problem for contractors.

As Category M prices are set to include an element of purchase profit, a fundamental part of the new contract funding arrangements, reimbursement prices may be higher than manufacturer’s list prices. To save money, some PCTs are encouraging branded prescribing.

When products are prescribed generically, pharmacies seek to obtain the best available generics prices, driving down the prices being charged by wholesalers and manufacturers and in turn the Drug Tariff reimbursement prices and costs for the NHS. Prescribing branded generics or off-patent branded medicines profoundly affects the competition that drives down prices in the generics market and acts to drive up costs to the NHS. It can also lead to unequal geographical distribution of the funding under the New Contract.

Branded generic manufacturers sell their brands into the market at prices that, of necessity, include the costs of their marketing efforts with PCTs and prescribers; costs not incurred by “true” generic manufacturers. They are able to list prices lower than those of the equivalent generic drug because they are not contributing, or are contributing only at minimal level, to the delivery of the agreed level of purchase profit that is part of the new pharmacy contract funding. The contribution that is missing is consumed by marketing costs and the branded generic manufacturer’s own profits.

PSNC is completely against this practice and has been raising the issue with the Department of Health for a number of years. There is significant history attached to this issue with this DH previously consulting on changes to the arrangements and the OFT considering this as part of their review on the PPRS arrangements. The OFT agreed with PSNC’s view that this practice was not in the interests of the NHS.

Since these reviews, the Department of Health has made a commitment, outlined in the PPRS agreement in 2009, to introduce Generic Substitution, and a consultation on this is scheduled to begin in the autumn. PSNC also continues to provide information and support to LPCs in dealing with branded generic prescribing on a local basis.

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