The DH takes the next step in the reform of drug reimbursement for community pharmacies
The DH consultation on the reform of drug reimbursement in community pharmacies, launched in July 2019 and running until September 17 of the same year, received 328 responses.
Reforming the way pharmacies are paid for the medicines they dispense against NHS prescriptions will ensure value for money for the NHS and improve cash flow for pharmacy contractors, the DH said in its response to consultation published today (11 November).
Although the DH found some level of disagreement in the responses to two of his eight proposalsthis was “not significant given that a substantial number of respondents chose the ‘don’t know’ option,” the DH said.
“Therefore, the government will forward all proposals for detailed discussion with the PSNC,” he added.
The DH and the PSNC will work together to implement the reforms, but “not all proposals will be implemented or advanced within the same time frame,” the DH said.
Mike Dent, PSNC’s Director of Pharmacy Funding, told C+D today that the negotiator expects to “now begin more detailed work with [the DH] on the proposals.
“The impact on community pharmacy contractors needs to be carefully considered at all stages, and we will discuss this again at the PSNC meeting in November,” he added.
Problems with branded generics
Category M is one of the tools to ensure the delivery of the drug margin and is deducted from the overall amount of the pharmacy, which is currently set at £800m per year until 2023/24.
Sometimes branded versions of generic drugs listed in category M may appear cheaper to the clinical commissioning group (CCG) or prescriber, the DH said, because some manufacturers list them at a lower price than the reimbursement price. of the generic. equivalent of the drug from the category M list.
“Reimbursement prices for brand name drugs, such as the manufacturers’ list price, may not allow pharmacy providers to get as much markup on drugs as a generic product reimbursed at an M-grade reimbursement price, nor even to obtain a margin”, wrote the DH.
He added that, based on the information obtained through the drug markup survey, branded drugs do not receive as many discounts as generic drugs.
Fighting the “distortion” of generic and branded drugs
For the reasons listed above, one of the reforms proposed by the DH is to change the distribution of the drug markup added to category M generic drugs for which a branded alternative exists.
Instead, an additional markup should be added to all other drugs in category M. This measure should “correct the current distortion where some generic drugs appear more expensive than the branded version” and provide “more equitable access to markup of drugs for pharmacy providers” because category M generics with a brand name equivalent will no longer appear more expensive after “less markup” is added to them.
While the majority of respondents agreed with this proposal, some feared it could trigger drug shortages if branded generic manufacturers decide to exit the market.
Meanwhile, others have suggested that the DH allow “generic substitution” – that is, when pharmacists dispense the generic equivalent of the brand name drug.
However, the DH said it would not pursue this measure.
Instead, he will work with the PSNC to endorse another suggestion from some respondents who said that if the DH decides to apply a lower markup to category M drugs, a different discount deduction should apply to these.
Entrepreneurs don’t need ‘more uncertainty’
Commenting on the DH’s response, Association of Independent Multiple Pharmacies CEO Leyla Hannbeck told C+D that “more uncertainty is… the last thing entrepreneurs need right now.”
“Pharmacy reimbursement is an important part of the remuneration system. Efficient purchasing and inventory control is one of the cornerstones of the value contractors bring to the NHS. We have seen during the pandemic that global supply chains are more fragile than previously thought and our main concern is the stability of funding,” added Dr Hannbeck.