Pharmaceutical Industry

Pharmaceutical Industry

Introduction

There can be no doubt that the people of the UK will still need drugs, whether or not the UK has a pharmaceutical industry[1, 2, 3, 4]. Various policies and pressures on the pharmaceutical environment are indicated. This paper identifies and discusses characteristics and attributes of the pharmaceutical industry to the wellbeing of the UK economy. As the UK is part of the European Union (EU) and that the EU is increasingly taking an interest in health care and industrial policy[5, 6] it is important to see what the UK stands to lose, should it lose its pharmaceutical industry base.

Policies and pressures in the pharmaceutical environment

Table I provides a summary of the policies and pressures on the UK pharmaceutical environment.

The first section of Table I identifies policies discharged by the previous UK government. These have been extensively reviewed in other papers[7, 8]. The range of policies include supply side measures (e.g. the Pharmaceutical Price Regulation Scheme) and demand side measures (e.g. raising the user charge). It is clear that government uses a variety of methods to influence the pharmaceutical market. It is less clear how these policies, individually or collectively, affect the environment[7, 8]. Nevertheless a lack of evidence of the effect of past policy will not stop policy makers considering repeating the policy. So, for example, demanding savings in the drugs bill of £25m by the last government can be tried again by the present government. Improving information systems and databases for GPs and pharmaceutical advisers to act on, as the changes to PACT and PRODIGY sought to achieve, can also be tried again by the present government. Indeed recent evidence supports the general evidence that GPs' knowledge of drugs costs is still not accurate[9, 10, 11].

The second section of Table I identifies two of the pressures from the EU environment. Under the pan-EU drug licensing system which came into force in January 1995, pharmaceutical companies can apply for pan-EU licences making the drug eligible to go on all member states' markets. From January 1998 some of the optional routes in the system became compulsory[6]. However just because a drug has a market licence this does not mean health care financiers will pay for the drug and it certainly does not follow that the purchasers will pay the price the drug company wants[3, 6]. Apart from the UK all member states' health-care purchasers now operate some form of pharmaceutical price or reimbursement control. Some of these are mentioned below in the discussion on what can replace the UK's profit regulation scheme. The second pressure in the UK market is the increasing prospect for cheaper products to be imported from other member states. This may be facilitated by larger, more powerful, wholesalers and vertical integration between wholesalers and retailers. Unichem's take-over of the French wholesaler Alliance Sante, in November 1997, gives the new company greater bargaining power with drug companies and retailers in France, Spain, Portugal and the UK.

The third section in Table I signals some of the additional ...