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Pharmaceutical Services Negotiating Committee

Costing Toolkit

Enhanced Services IconThe development and negotiation of locally commissioned services is a significant part of the workload of most LPCs. The following LPC Briefing on Enhanced services summarises the discussions at the 2006 LPC Conference on Enhanced services and highlights resources available from PSNC to support LPCs in this area of operation.

LPC Briefing - Enhanced Services (2006) (PDF)

LPC Briefing Annex A - How to develop a successful service proposal (2006) (PDF)

Other resources to assist LPCs with local commissioning include:

Sources of Funding 2005 (PDF)

PSNC guidance on Service Level Agreements (SLAs) (PDF)

PSNC online services database

Costing Toolkit

The Enhanced services Costing Toolkit has been developed by PSNC and endorsed by NHS Employers. It is intended to be used by LPCs and service commissioenrs to assist them in agreeing the costs that will be incurred by the provision of a particular service. The toolkit can be accessed via the link at the bottom of this page.

Competition legislation issues

The tempate local service specifications provide an almost infinitely variable framework for locally commissioned services and this complexity requires careful consideration of all the factors to determine a fair level of fees and allowances. The purpose of the pricing toolkit is to provide a transparent process for both the commissioner and the LPC in negotiating these locally commissioned services.

LPCs want to discuss with other LPCs the levels of fees paid for other comparable services commissioned elsewhere. It is likely that commissioners would also wish to establish ‘ball park’ figures for services that have been commissioned elsewhere before negotiating locally.

The PSNC has sought guidance from the Office of Fair Trading on such sharing of information and has been advised on an informal basis, that the sharing of historic (i.e. previously agreed) fees by LPCs is unlikely to contravene the competition legislation, as the LPCs are not competing with each other. The informal advice from the OFT is limited in nature, and it is important to recognise that it does not authorise the sharing of information relating to proposed fees.

The pricing toolkit does not include actual prices; the PSNC does not believe that the pricing toolkit contravenes competition legislation. It is similar to the nationally agreed template service specifications, providing an indication of the factors to be included in negotiating local services,  and is freely available to both LPCs and service commissioners and is not binding on either party.

Competition legislation is very important in ensuring that competition is not stifled and that co-ordinated practices or agreements between parties do not unfairly drive prices up or down. Service commissioners should be careful not to act in a way that may directly or indirectly affect competition, and if they have concerns that their procedures may risk breaching the competition legislation, they should take their own legal advice.

As the Office of Fair Trading no longer gives formal (i.e. binding) guidance about whether a particular practice is likely to contravene competition legislation, it is vital that PSNC and NHS Employers, as the national representative bodies, and the LPCs and service commissioners as local parties to negotiations all behave responsibly and do not set out to undermine competition or otherwise breach the legislation, and are prepared to act swiftly if any practice is found to be or it is suggested that it might breach the legislation.

The Office of Fair Trading will give informal views (although this is likely to take time), but in some cases, it may be necessary to take legal advice from lawyers experienced in competition matters. Although it is for each organisation to decide whether it needs to seek guidance about its own practices, it is hoped that all organisations would be open with the others about any concerns, so that all may review whether their practices comply with the legislation.

Enhanced Services Costing Toolkit (Version 2) (PDF)

Letter from the Office of Fair Trading to PSNC (PDF)