An investigation into the role of contract drug purchasing in hospitals

Abstract

Whereas health care resources are limited, demands upon them are insatiable. Drug expenditure has received particular attention in attempts to regulate increasing costs. For hospitals, contract purchasing is designed to regulate drug expense. This thesis examines the contract mechanisms. Information was collected from pharmacists and supplies officers in all English health regions and pharmaceutical companies supplying the bulk of hospital drug requirements. The main findings of the research are:- 1 There is a large, unexplainable difference in price charged to various health regions for an identical drug. Price charged is independent of all obvious correlates. 2 Despite the oligopgonistic power of the National Health Service there is no centralised interchange of price or purchasing information between health regions. 3 Pharmaceutical suppliers view hospital drug purchasing as fertile for opportunistic pricing within the context of total profit regulation. 4 There is an ill-defined working relationship between pharmacists and supplies officers in the implementation of drug contracts, often amicable locally but tense and competitive nationally. The overall impression is of a purchasing mechanism which, due to its political sensitivity, has, by default, become increasingly outmoded and represents a triumph of public accountability over individual negotiating skill. The overall regulation of pricing is in substantive conflict with the hospital contract system. One encourages UK research, the other not, while the savings in hospital purchase are redundant in the context of both overall corporate and Governmental financing. Cost savings are unknown. Other methods of acquisition such as prime vendor buying should be considered, as a means of improving purchase efficiency for both supplier and purchaser.