A review of medicine pricing and the drug tariff is crucial to address increasing medicine shortages in the UK, Malcolm Harrison, CEO of the Company Chemists Association (CCA) has said.
He has also emphasised the need to eliminate some of the red tape and operational complexities to maintain a resilient supply chain, ensuring that pharmacies and wholesalers can operate sustainably, and manufacturers and suppliers view the UK as an attractive market.
“Medicine pricing in the UK has been squeezed so much that the market is becoming unattractive, leading to medicine shortages,” Harrison told Pharmacy Business.
Highlighting the extent of the medical shortages in the UK, Harrison stated that the number of concessionary price listings has risen dramatically, from 200-300 annually in 2014-2017 to over 1,500 in the past year.
“There's been a significant uplift in the number of times the Department of Health and Social Care has had to put in additional funding to pay for medicines because of price spikes,” he said, emphasising that when demand outstrips supply, prices go up.
As examples, he referred to some high-profile cases of medicine shortages in recent years, such as increased demand for HRT replacement, issues with children's antibiotics for strep A infections, and short supply of ADHD medications.
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Impact on pharmacies
Harrison acknowledged that medicine shortages impact all pharmacies, including larger chains and single operators.
In large businesses, there are dedicated procurement teams to source medicines while single operators manage this themselves. But the situation is the same in both cases, as they’re having to invest significant time and money trying to source medicines that are available and affordable.
“Pharmacists also spend a lot more time with patients, explaining shortages, advising on alternatives, and helping them navigate the situation,” he said.
Harrison highlighted a challenging situation where a pharmacy has a patient requiring multiple medicines, but only some are available.
“If a prescription is partially dispensed by a pharmacy, it cannot then be given to another pharmacy to dispense the remaining items,” he explained.
Harrison added that patients are faced with the prospect of needing to return to the prescriber to request an alternative prescription if the pharmacy cannot supply the remaining medicines within a reasonable timeframe to meet the patient’s needs.
In this situation, the pharmacy has to indicate on the original prescription that the undispensed items were not provided so that a new prescription can be processed, allowing the patient to seek those medicines elsewhere.
However, when the medicines are entirely unavailable, there's no immediate solution, he added.
Pharmacy contractors sign up with multiple wholesalers to maximize medicine availability. This approach provides them with various options to mitigate supply shortages and ensure they can meet patient needs effectively.
Harrison elaborated: “All businesses will have a first-line wholesaler they work with, along with arrangements with other wholesalers. If their main wholesaler lacks specific products, they can source them elsewhere. This is managed at the branch or company level depending on the business model that the business has."
In this video, he explains the strategy CCA members apply to address medicine shortages ...
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Causes of medicine shortages
Global supply chain dependency and limited domestic manufacturing capacity were cited as key factors contributing to shortages.
“The medicines market is largely global now. We don't manufacture drugs in this country solely for domestic use; a lot of what we produce is for export, and many of the medicines we use are imported from other parts of the world,” said Harrison.
When asked why the UK couldn’t just manufacture more medicines, Harrison emphasised that the UK currently doesn't have the manufacturing capacity to produce all the medicines it needs.
A significant infrastructure investment would be required to manufacture the medicines domestically, and the country would still need to rely on imported raw materials for production.
“The vast majority of generic medicines we buy are imported from global markets, as it is more cost-effective to purchase them rather than manufacture them locally,” he stated.
Shortages can also result from manufacturers exiting the market.
“When the medicine price goes too low, some manufacturers may have to review their portfolios and decide whether it's actually in their interest to import or to manufacture into this country,” said Harrison.
“When manufacturers exit the market, it leads to a shortage, while other manufacturers may step in, causing price fluctuations.”
Once prices increase, suppliers may return to the market, bringing supply up, which again leads to price reduction.
He described that many factors affecting medicine supply are beyond the control of commissioners, buyers, pharmacies, and wholesalers in the country.
However, he believes that certain aspects of medicine shortages can be partially prevented, including the drug tariff that the department uses to control pricing.
“Sometimes, the price in the drug tariff is reduced by a few pennies. What then happens is the price spikes massively and then falls again, normally to a price higher than before the initial reduction. This continual downward pressure can be counterproductive,” said Harrison.
“We've had this model for over 20 years, which has worked for the NHS and the taxpayer, but I think we are coming to the end of its usefulness.
“By keeping a constant downward pressure on prices, they can ensure that pharmacies are buying the best prices on the market, helping to keep the cost of medicines in the country low.”
He added that without increased funding in the system, the UK market will continue to be challenging for manufacturers and suppliers.
Factors leading to shortages explained here....
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Proposed solutions to address shortages and their impact
Drug Tariff and Pricing Reforms
Harrison called for assessing both the drug tariff and the reimbursement rates for medicines, ensuring that the retained margin available to pharmacies represents a fair return on their investments.
“Pharmacies procure approximately £9.5 billion worth of medicines annually for the NHS, and it's only fair that they get a fair return that enables them to maintain their business and invest in their people and their infrastructure.”
The current amount of retained margin that pharmacies are allowed to make is £800 million, which was originally agreed over 10 years ago, in 2014.
Harrison argued: “The volume of medicines and the cost of medicines have grown by 14% and 20% respectively since 2014, but the margin that pharmacies are allowed to make has not changed.”
“This puts extreme pressure on pharmacies. When you also factor in that they're having to work harder to source medicines due to shortages, it creates a really tight situation for pharmacy businesses to be able to supply medicines in this country.”
He maintained that “pharmacies should be able to supply medicines without suffering financial losses.”
What steps are needed to reduce the impact on pharmacies? Harrison explains here...
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Policy Changes
The Royal Pharmaceutical Society (RPS), in its report, Medicines Shortages: Solutions for Shelves, has called on the government to change legislation to cut red tape and allow community pharmacists to make minor adjustments to prescriptions when medicines are in short supply.
The Department of Health is currently reviewing this proposal.
Harrison stated that this proposal would reduce the need for patients to go back to prescribers for a new prescription.
“Anything that can help with medicine availability has got to be positive, obviously based on clinical needs," he said.
However, Harrison raised concerns that it could lead to another challenge, given that most businesses rely on the 'just-in-time' supply chain model.
This means wholesalers and pharmacies ensure to have the volume to meet immediate needs but avoid massive stockpiles as that can tie up money.
“When a specific dosage, like the 10mg tablet, is out of stock and pharmacists begin dispensing alternative dosages (e.g., two 5mg tablets), the demand for these alternatives will quickly surge. Consequently, this increased demand can deplete the stock of alternative dosages, leading to broader shortages,” he explained.
"There are not many quick fixes or easy wins on these issues that need to be considered."
“So, when there are shortages, it's important for the pharmacist, the patient and the prescriber to collaborate to determine what's the best for that patient,” he said.
Better communication
When the DHSC anticipates a significant shortage of a specific medicine, it can issue a Serious Shortage Protocol (SSP). This protocol allows pharmacists to supply a specified alternative for that medicine.
“This system is not very smooth,” Harrison said, stressing the need to improve communication regarding SSPs to ensure pharmacies are promptly informed about the initiation and conclusion of these protocols.
He believes that integrating SSP updates with pharmacy systems could make things better for pharmacists.
From August 2026, all registrants entering the pharmacy register will have a prescribing qualification.
Harrison is hopeful that this will help enhance the flexibility of pharmacists in patient care.
He believes that implementing a hub-and-spoke model could potentially improve supply levels across the system, but noted “It's not a magic bullet.”
He also thinks that, at present, there’s not sufficient margin or funding in the system to allow independent pharmacies to pay for someone else to do dispensing for them.
