The prices pharmacists and dispensing doctors pay for antibiotics have risen in recent months amidst shortages and concessions. The product which rose the most between Jan 2022 and Jan 2023 was Co-Amoxiclav Tabs 500mg/125mg 21 which rose from an average price of £1.39 in Jan 2022 to £8.50 in Jan 2023, an increase of 512%.
Co-Amoxiclav Tabs 500mg/125mg 21 has been granted concessions by the DHSC three times in the last 20 years, in 2014, 2018 and now. There were 52 months between the first and second concessions, and 47 between the second and third. This therefore suggests a four year repeating pattern of high prices and concessions. These patterns, which are seen in many generic products, are controlled by competition driving prices down to unprofitable levels. Some manufacturers then withdraw, stock in the market is depleted by dispensing, and prices rise again. Then new stock arrives in the market as it is once again profitable.
The low prices which triggered these price rises were £2.16 in 2013, £1.38 in 2017 and £1.35 in 2022, suggesting that the manufacturing cost declined between 2013 and 2017, but stabilised in the 2017 to 2022 period.
Additional to the three price peaks mentioned above there were price peaks in 2006 and 2012. The gap between these two is five and a half years, and the gap between the peaks in 2012 and 2013 is just 21 months. These price peaks probably relate to the declining cost of manufacturing this product and the time it took competition to push the price down to unprofitable levels. The unprofitable prices which triggered the 2006 and 2012 peaks were £4.75 and £3.69.
Putting all these unprofitable prices together produces a smooth graph, suggesting that unprofitability, shortages and concessions are mathematically controlled and may be predictable. If the four year pattern holds true, then the next shortage, price rise and concession can be expected in 2026, but it will depends on how long the UK’s highly competitive generic market takes to drive prices down again.
Products which repeatedly suffer shortages and have concessions granted are typically in category M and tend to have low reimbursement prices. This means there’s not much profit in these products for pharmacists, suppliers or manufacturers. We believe that it is these low tariff prices which drive the shortages and the concessions. Products with higher reimbursement prices (ie categories A and C) do not typically need to have concessions as there is sufficient profit for all supply chain actors.