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DHSC quizzed on generics cost hike

Will new calculation end generics overspending?


Generic medicine costs shot up during 2017/18, due partly to inflated concessionary prices, resulting in additional unforeseen costs to clinical commissioning groups (CCGs) of £86.3m.


The National Audit Office (NAO) quizzed the Department of Health and Social Care (DHSC) and NHS England about the rise that put pressure on commissioners’ budgets. Results have been published in Investigation into NHS spending on generic medicines in primary care.


The DHSC blamed a destabilised generics market, an international downward pressure on generics prices, and a fall in sterling. It also observed that after summer 2017, manufacturers’ selling prices went up and wholesalers’ margins increased. At the same time, the DHSC’s concessionary prices, which it pays to pharmacies unable to obtain drugs at or under the Drug tariff cost, were higher than necessary.


The DHSC intends to recoup some of the overpayment in the next few years. It has also changed the calculation it uses to establish these prices.


In July, the Health Service Medical Supplies (Costs) Act comes into effect, giving the DHSC more powers to interrogate manufacturers and wholesalers about sales and costs.


Further information

National Audit Office: Investigation into NHS spending on generic medicines in primary care

Wilmington Healthcare: Can legislation to close a purchasing loophole reduce the NHS medicines bill?