Monday 15th July, 2013

Drugs companies have been accused of making use of a legal loophole to overcharge the NHS by several millions of pounds. The news follows an investigation by undercover Daily Telegraph reporters which revealed pharmaceutical companies entering into deals with chemists for so-called "specials" - drugs which fall outside the NHS price regulations. The "scam" involves the pricing of around 20,000 drugs - some of them - such as an epilepsy drug prescribed to several thousands of patients, was inflated by 24 times.

Sales representatives of the pharmaceutical companies agreed in some cases to invoice far more than the actual cost of the medicines, allowing the chemists to pocket the difference. In other cases, deals were struck whereby chemists were paid an annual fee as a sweetner to continue to distribute the drugs.

The Telegraph also found that some companies were prepared to offer cash "rebates" or discounts to chemists to win business.

Dhruv Patel, the head of unlicensed pharmaceutical sales at Pharmarama International Limited, told undercover reporters:

"You get an invoice with a price which you stamp and submit [to the NHS]." The chemist would then be given a "credit note" by the company which "will show what you pay us and that’s 50 per cent less than the value of the invoice".

When one of the reporters asked how much the "rebate" or "discount" was usually, he said it was 50 per cent. This means that the NHS is being charged twice as much for the drug as chemists actually pay. At a time when many departments are facing a squeeze on overall spend, today's news is likely to call some elements of the  financial management of the NHS into question.