UK to Study Anticompetitive Effects of Pfizer's Distribution Contracts

As part of its market study into exclusive pharmaceutical distribution contracts, the UK's Office of Fair Trading (OFT) could launch an investigation into Pfizer's wholesale distribution contract with Unichem.

The OFT recently announced the initiation of a study into the anticompetitive effects of exclusive and direct-to-pharmacy distribution contracts. The study was prompted when the agency received "several hundred complaints" from pharmacists, wholesalers and dispensing physicians over Pfizer's recently instituted direct-to-pharmacy distribution contract with Unichem.

The study will focus on direct-to-pharmacy distribution models, and exclusive wholesaler contracts and their competitive effects on the marketplace. It will also evaluate "incentives created by sector specific regulations" and the potential impact different distribution models have on "the appropriation of discounts secured by pharmacies" and "service levels to patients," the OFT said.

If the OFT finds that Pfizer's distribution model is anticompetitive, then it can take regulatory action. Apart from the investigation, the OFT can also find that direct-to-pharmacy and exclusive distribution contracts are legitimate under UK regulations, refer the matter to the Competition Commission or make recommendations to the Department of Health for regulatory changes. The OFT's concern with direct-to-pharmacy and exclusive distribution contracts is that they could potentially hinder access to drugs.

Pfizer said that it will fully cooperate with the OFT and that it was pleased the agency decided not to initiate a formal investigation into its specific contract with Unichem. The firm also said that that the main thrust behind its transition to a direct-to-pharmacy model is the increasing incidence of counterfeit medications.

In the UK, Pfizer is changing its supply and distribution arrangements to allow the company to take full responsibility for its prescription medicines from the point at which they leave its manufacturing centers until they are sold to its customers who dispense them, the company said.