At first we struggled to understand why this product had been added to the list of DHSC Concessions in July. Actually it had the highest concession price at £214.96, but the market price had remained high as had the reimbursement price. However it was only when we began to think about pharmacy profitability that the penny dropped.
This product has been unprofitable or only marginally profitable for much of the last 10 years. During that time there have been 18 months when pharmacists lost money, 34 months when they broke even and 68 months when dispensing made money. However profit was only available for periods between July 2024 and Jan 2015, and after November 2020.
It does look as if the DHSC have been aware that there was a potential problem with this product in recent years as they have changed the drug tariff a number of times recently and granted concessions in July and August this year.
When products have low or negative profitability manufacturers have to think about which they will continue to make and which they will drop. They are commercial organisations and need to continue to make profits to satisfy their shareholders and survive. In the past most manufacturers had ‘loss leading’ products which were unprofitable to make, but which helped with the selling process. Now with their feet to the fire and survival much more of a concern manufacturers are far more likely to drop low or unprofitable products and this may be one of them. Without a longer term increase in the drug tariff this product may disappear from pharmacy shelves, leaving doctors, pharmacists and patients as customers for specials companies.