Royal Surrey sold millions of pounds of NHS drugs in 'unacceptable' export trading

An HSJ investigation has revealed Royal Surrey County Hospital Foundation Trust is the trust whose flirtation with the pharmaceutical export market sparked concern at the Department of Health, which believed it could “rapidly” and “immediately” create serious shortages for vital hospital drugs.

Quite simply, if product is diverted in this way it is likely to have an immediate and dramatic impact on the availability of product to treat UK patients

But despite the DH’s concern the Royal Surrey’s trading activities helped shore up its foundation trust application. By December - the month it was awarded foundation status - the trust had almost doubled its performance on the principal profit rate measure used by the regulator Monitor from 4.6 per cent to 8.3 per cent.

The trust earned £4.6m in revenue over 10 months by buying up drugs at the NHS price and selling them to a wholesaler for export, as the low value of the pound meant they could be sold at a profit. It made £300,000 profit on the sales.

It only ended the practice last month - six months after the DH branded the trading “wholly unacceptable” and said it threatened the safe supply of medicines to the NHS.

There are now more than 40 branded and generic medicines in short supply in the UK. These include Zyprexa, which is used to treat schizophrenia, and Glivec, which is used to treat advance stage leukaemia.

Health minister Mike O’Brien has called for an emergency summit to address mounting NHS drug shortages, which he said were being exacerbated by “unscrupulous” speculators who were “putting profit before patients” by selling drugs intended for NHS use abroad.

HSJ uncovered the Royal Surrey’s activities by correlating information obtained through a Freedom of Information request with the trust’s finance reports.

The foundation’s finance director Paul Biddle told HSJ: “Yes, we did see this as an opportunity to make a margin.”

“I felt we hadn’t anything to hide in this. It was openly declared when we went through assessment with Monitor. They have always encouraged trusts to be entrepreneurial.”

He said the trust had not sold any drugs that were in danger of short supply to the NHS. But the foundation refused to give HSJ a list of the drugs which were traded, saying this was “commercially sensitive”.

The foundation ceased trading in hospital drugs in January - partly due to the public concern around the impact of so called “parallel trading”, and partly due to the diminished opportunity for a profit, as the value of the euro fell from a peak of 94p in October to 86p by the end of the month.

Internal memos released to HSJ show that some time before the end of May 2009 a whistleblower from the South East region alerted the DH that a trust in the region was suspected of trading drugs for export.

As HSJ reported in January 2009, the NHS was already experiencing drug shortages as the weak pound caused cheap imports to dry up and manufacturers imposed supply quotas to prevent community pharmacists from over-ordering for export.

But in an email to the whistleblower dated 27 May 2009, the NHS Purchasing and Supply Agency’s principle pharmacist Howard Stokoe said the spread of export trading to acute hospitals was a “serious concern” due to the relatively small volumes of drugs supplied to hospitals.

Mr Stokoe wrote: “Quite simply, if product is diverted in this way it is likely to have an immediate and dramatic impact on the availability of product to treat UK patients.”

“Not only would this compromise patient care it would also be damaging for the reputations of any NHS trusts involved in this practice.”

Mr Stokoe also warned that pharmaceutical manufacturers might regard onward sales for profit as an abuse of the NHS pricing agreement - jeopardising future negotiations for NHS discounts.

That exchange of emails culminated in a letter being sent from DH chief pharmacist Keith Ridge to all hospital chief pharmacists last July which said it was “wholly unacceptable” and “irresponsible” for NHS hospitals to export drugs. However, the Royal Surrey continued to trade for six months after this.

Mr Biddle told HSJ: “We absolutely assured ourselves the drugs being supplied were freely available. There was no question of diverting drugs needed for the NHS. But because of the publicity and the fact it was a short term accountancy opportunity we saw it for only a limited period. So we stopped as of January 2010.”

A spokesman for Monitor confirmed it was aware of the Royal Surrey’s drug trading, but he said: “So long as the drug trading does not affect UK patients or the ability of the trust board to focus on their core responsibilities this is not an issue on which we would take a view.”

In April 2010, HSJ revealed a number of drugs sold by the Royal Surrey were subsequently listed as in shortage. Click here to read the story and see the full list of drugs sold