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AZ and Lilly set to follow Pfizer on supply chain

Published on 19/01/07 at 11:04am

Two major pharma companies could be set to follow Pfizer in using a single supply chain distributor of their medicines in the UK.

AstraZeneca and Eli Lilly have both confirmed that they are considering changes to their distribution system, just months after Pfizer made its move.

Pfizer announced in October it was to make UniChem the sole distributor of its medicines to community pharmacists and dispensing doctors - the first system of its kind in Britain.

The company says the move is intended to stop counterfeit medicines finding their way into the supply chain, but pharmacists say it is also intended to block parallel imports - a legal trade, but one which hits UK pharma company profits.

In contrast, many community pharmacists use parallel imports to earn extra income, and the move has been condemned by the profession's leaders.

Pharmacists have also expressed concerns that the single distributor deal could potentially disrupt supplies to patients.

Another group opposed to the change is the British Association of Pharmaceutical Wholesalers (BAPW), which is concerned some of its members could be put out of business.

Acting on complaints, the Office of Fair Trading is currently considering whether or not to launch an investigation into Pfizer's new system, which it may deem to be anti-competitive.

Pfize'rs new system is set to begin in March, and both AstraZeneca and Lilly could be biding their time in order to observe Pfizer's experience.

AstraZeneca and Lilly could opt to use two distributors each rather than Pfizer's one, thereby overcoming claims of a monopoly, but the companies have given no hints as to what their final decisions might be.

A spokeswoman for AstraZeneca said: "We are undertaking a strategic review of our supply chain and have decided that there are opportunities to improve existing arrangements."

She confirmed the company had contacted a number of organisations and had issued a tender for further discussions.

Meanwhile an Eli Lilly spokesman commented: "We are considering a number of options, to decide whether we continue with our present system or introduce a new one."

Both companies revealed that any new distribution policies would be put in place by the end of the year.

The Pharmaceutical Services Negotiating Committee maintains that it is very concerned about Pfizer's plans, and says there is no experience in the UK of a single supply route for major product lines.

PSNC's chief executive Sue Sharpe, said: "We are concerned that having only one source of supply could mean pharmacies cannot meet patient needs promptly. There have been many cases of supply shortages of some Pfizer medicines in recent months, which pharmacies have been able to overcome by finding a wholesaler with some stock."

A number of questions have been asked in parliament on the subject, but health ministers have made it clear they do not intend to step into the argument.

In response to a parliamentary question, minister Andy Burnham said: "Ministers have held no discussions with either Pfizer or Unichem. However, officials have met both parties in order to secure the assurances provided that the new arrangements will provide an appropriate and continued supply of United Kingdom-sourced Pfizer products to pharmacists, hospitals and dispensing doctors."

He added that the government considered it "a commercial matter for Pfizer", and that said the company had assured the Department of Health that there would be no disruptions in the supply of its UK-sourced branded medicines to patients or any increase in costs.

"The department will monitor these new arrangements with a view to taking corrective action if appropriate," Burnham concluded.

If the OFT chooses not to investigate Pfizer, many of the UK industry's companies might follow suit.

GlaxoSmithKline, however, is one company which has already declared that it will not alter its existing system. A spokesman said: "We have had a distribution model in place for more than 10 years and we have no plans to change it. We use 12 distributors and pharmacists buy drugs directly from them."

He concluded: "This system works perfectly for us - but I cannot comment on how other drug companies systems work."


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