NHS paying up to £1bn too much for drugs, says report

The NHS could be paying up to £1bn a year too much for drugs, according to an investigation revealing the scale of companies using a legal loophole to hike prices.

Researchers at the University of Liverpool found the health service wastes as much as £60m a year by overpaying for basic painkillers and vitamins, which can often be bought more cheaply in supermarkets.

Buying paracetamol at Asda, where tablets cost 1.2p each instead of the 3p the NHS pays, could save £41m, they say.

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The report also says health bosses can end up paying more when complex drugs to treat particular conditions are debranded.

While branded medication is subject to price regulation, generic drugs, which are no longer under patent, are not.

In theory, this should lead to competition and drive down prices. However, in many cases – and especially when the drugs are sold on by the original developer - the prices actually increase.

The researchers said the NHS has been "too lax in challenging price increases by companies that have dramatically raised the cost of generic drugs".

Health Secretary Jeremy Hunt has tabled laws to allow the NHS to reject excessive price hikes following a report in The Times saying companies are exploiting a loophole to raise prices by up to 12,500 per cent.

Analysis of the costs of 300 drugs prescribed by GPs over the last five years showed that price rises for generic medicines are common, with the prices of 157 drugs rising more than 40 per cent.

Last month, Pfizer was slapped with a record fine of £84m for allegedly hiking the price of an epilepsy drug by 2,600 per cent.

Fellow drug-maker Actavis was also accused of increasing the price of a pill used to treat life-threatening illnesses such as Addison's disease by more than 12,000 per cent, costing the NHS £70m.