The Office of Fair Trading yesterday launched a sweeping review of the way in which prescription medicines are distributed to patients by drug companies in the UK, after hundreds of complaints from pharmacists and pressure from MPs.

The OFT’s decision comes after the introduction of a controversial new exclusive distribution deal between Pfizer, the world’s largest drug maker, and UniChem, the wholesaling arm of Alliance Boots, which is the target of a £10 billion takeover bid from Kohlberg Kravis Roberts, the private equity group.

Pfizer’s “direct to pharmacy” model, which cuts out traditional drug wholesalers, has been attacked by independent pharmacists, MPs and rival wholesalers. They argue that restricting the distribution of all Pfizer products to one UK supplier poses a threat to competition, drug pricing, patient welfare and the NHS.

Other drug companies, including AstraZeneca, Eli Lilly and Novartis, are considering similar plans.

The Times reported last October that the OFT was examining the Pfizer-UniChem deal.

Ann Pope, OFT director of markets and projects, said that the decision to investigate the market was taken after the watchdog had received more than 500 complaints “mainly from pharmacists, who are concerned they no longer have a choice about who to buy from” and who were worried about the impact of the new arrangements on drug pricing.

Pfizer’s products represent 15 per cent of the UK medicines market and include top-selling drugs such as Lipitor, the cholesterol fighter, and Viagra, the antiimpotence drug. The OFT will explore the possible impact of such changes on competition, the NHS and patients and will report back by the end of the year.

Ms Pope said that the OFT will work closely with the Department of Health and will consult other European countries, likely to include Germany, Poland and Spain, where drug companies are attempting to introduce similar schemes.

The OFT could then refer the inquiry to the Competition Commission and force companies to suspend activities. It also has the power to impose financial penalties of up to 10 per cent of their UK turnover. However, a spokesman for KKR said that the OFT inquiry is unlikely to have an impact on the sale of Alliance Boots and shares in the group were little-changed.

Both Pfizer and Alliance Boots said that they “welcomed” the decision and would continue to operate as normal during the inquiry.

The OFT added that the inquiry reflects the need to ensure that the UK’s system of medicine distribution is reliable and represents good value for money for both patients and the NHS, which spends more than £10 billion per year on prescription medicines.

Ms Pope said that a team of five people will work on the project full-time.

Jim McGovern, the Labour MP for Dundee West, who tabled an early day motion against the Pfizer/Unichem deal after complaints from pharmacists in his constituency, welcomed the OFT’s decision. “I’m delighted,” he said. “This is exactly what I have been seeking.”

Pfizer claims that its desire to take greater control of the supply chain is aimed at stopping counterfeit medicines from reaching consumers. Critics such as Mr McGovern have called this a smokescreen. They claim that Pfizer and other drug companies want to extend their control of the pharmaceutical supply chain to influence pricing.

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