A controversial scheme that changes the way prescription medicines are distributed to patients by pharmaceutical companies could add millions of pounds to NHS drugs bills and result in longer waiting times for patients to receive medicines.

The Office of Fair Trading (OFT) today published a study into the impact of a distribution deal between Pfizer, the world's largest drug maker, which bypasses its traditional wholesale suppliers to sell directly to pharmacies through UniChem, the wholesaling arm of Alliance Boots.

The report said there is a "significant risk" of higher drugs cost to the NHS and any future widespread use of exclusive distribution arrangements might also lead to longer-term competition concerns.

The OFT is recommending the Government takes steps to ensure changes in distribution do not bring about price increases.

To counteract the prospect of long waiting times for patients to receive medicines, it said the Government should ensure manufacturers adopt minimum service standards.

Pfizer's "direct to pharmacy" (DTP) model has been attacked by independent pharmacists, MPs and rival wholesalers who 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.

DTP schemes allow manufacturers to increase the prices paid by pharmacies and to control the delivery for the distribution of their medicines. However, the report found such schemes may also give rise to efficiences in distribution.

A Pfizer spokesman said: "Pfizer is pleased to note that the OFT report contains no recommendations for further action or referrals on competition grounds. The company welcomes the OFT's acknowledgement that 'such schemes may also give rise to efficiencies in distribution'."

Pfizer denies the DTP scheme increases the cost of medicine to the NHS.

A spokesman for Alliance Boots, said: "We are extremely pleased that after 14 months of consultation with affected parties and the Government the OFT has found no grounds for interference with the Pfizer direct to pharmacy agreement.

"This decision has not changed anything. It's business as usual."

Several other drugs companies, including AstraZeneca, Eli Lilly and Novartis are considering similar distribution plans.

A spokesman for the Association of the British Pharmaceutical Industry said: "Our concerns are not a million miles from those of the OFT. We would hope to see patient safety guaranteed, speed of service and supply chain security as an intrinsic part of whatever system companies choose to adopt."

Today's report follows on from the OFT's recommendations announced in February to reform the Pharmaceutical Price Regulation Scheme.

The NHS spends around £6 billion a year on branded prescriptive medicines dispensed by retail pharmacies.

John Fingleton, the OFT's chief executive, said: 'The changes to the distribution of medicines in the UK are among the most significant for many years and have given rise to real concerns.

"Building on our suggested reform of the PPRS, further action is needed to prevent increases in NHS medicines costs and to ensure service standards pharmacies to patients are of a satisfactory standard."

The Government now has 90 days to respond to the report. A spokesman for the Department of Health declined to comment.

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