Hospital made profit on NHS drugs sold abroad

A Surrey hospital sold millions of pounds worth of NHS medicines abroad during the past year, despite official warnings calling for an end to such arbitrage for fear it could lead to shortages for British patients.

The Royal Surrey County Hospital in Guildford confirmed a report in the Health Service Journal that it had made £300,000 in profit by exporting £4.6m in medicines in the 10 months to January.

The revelations precede a conference convened next month by Mike O’Brien, the health minister, designed to clamp down on such “parallel trade” after pressure by the pharmaceutical industry. They provide a clear example of NHS entities trading for profit, despite a statement by the Department of Health to the Financial Times last week that it was unaware of any particular examples.

The weakness of sterling against the euro has turned the UK into a low priced source of medicines in the past two years, allowing intermediaries to buy them for resale at a higher price elsewhere in Europe, such as Germany.

The UK was formerly a net importer of drugs from lower-priced countries such as Greece, as part of the widespread practice of parallel trade, transferring potential drugs company profits into the hands of intermediary traders.

While individual pharmacies and some drugs wholesalers have long taken part in this cross-border arbitrage, which is legal under European Union law, the government became concerned in recent months at the possible involvement of NHS hospital pharmacies. The chief pharmacist wrote to them last July, calling the practice “irresponsible”.

The arbitrage runs the risk of creating medicine shortages in the UK. Officials were particularly concerned because of extra pressure on medical services caused by the flu pandemic. 

Bad weather in recent weeks also caused breaks in the normal drugs supply chain, causing stock shortages that could have threatened patients’ lives.

Monitor, the hospital regulator, said it had inspected the Royal Surrey’s practices in preparation for its conversion into a foundation trust in December but found no fault with the practice.

“As long as what they are doing is not illegal and doesn’t affect their ability to focus on NHS patients, it is not an issue for us,” Monitor said. It cited other commercial activities, such as childcare, while saying that car parking had become subject to ministerial  scrutiny.

The hospital said it had discontinued the parallel export of medicines last month in response to negative publicity and when a shift in exchange rates made the practice less lucrative. It said it was satisfied it did not run the risk of forming any medicine shortages for NHS patients.

The Department of Health told the FT last week that it had “received anecdotal evidence of NHS trusts being approached to become involved in such activities but has no concrete evidence that NHS trusts are involved”.

The department said that it was “aware of a report that a hospital has considered trading in medicines for short-term financial gain. Such activities are wrong and threaten the medicines supply chain and patient care.”

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