Europe’s parallel trade in prescription medicines saves the NHS up to £160 million a year in reduced drug prices, the British Association of European Pharmaceutical Distributors said this week.

The association, an industry lobby group that represents parallel traders, was responding to a decision on Wednesday by the Office of Fair Trading (OFT) to initiate a big review of Britain’s wholesale pharmaceuticals market. The move came after hundreds of complaints were made about a new, exclusive distribution deal between Pfizer, the world’s largest drug company, and UniChem, the wholesaling arm of Alliance Boots.

Opponents of the new direct-to-pharmacy model, which makes UniChem the sole UK distributor of all Pfizer products, assert that one of its main aims is to stamp out parallel trade. The legal practice — fiercely opposed by drugmakers — entails wholesalers purchasing branded medicines in low-cost countries within the EU and exporting them at a profit to other countries. But the association, which is fighting legal actions over the issue with big drug companies in Spain, says that parallel trade encourages competition and drives down the prices paid for drugs both for consumers and the NHS, which spends £8 billion a year on branded pharmaceuticals.

The association says that, if the OFT approves the direct-to-pharmacy model, which cuts out wholesalers, drug prices would rise and the money would go directly into the pockets of big companies, such as Pfizer, which controls 15 per cent of the UK medicines market. Several other drugmakers, including AstraZeneca, Eli Lilly and Novartis, are considering similar distribution schemes.

However, the leading British drug companies have rejected the association’s arguments. “We don’t believe parallel trade is of any benefit to the NHS,” a spokesman for the Association of the British Pharmaceutical Industry said yesterday. “It costs the industry money and, therefore, the amount we have available for research and development in the UK. It also provides a weakness in the medicine supply chain.”

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax