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Pharmaceutical Services Negotiating Committee

Essential Services Funding

Funding for the National Contract is distributed through a variety of fees and allowances along with an element of guaranteed purchase profit.

Individual pharmacies' income may vary, as under the previous contract, according to the mix of products dispensed and the numbers of additional fees earned, for example, for dispensing controlled drugs and expensive prescription items.

Fees

Pharmacy contractors receive a professional fee for every item dispensed including medicines and appliances. This fee is currently 90p per item.

Pharmacy contractors can also claim a range of additional fees which are set out in Part IIIA of the Drug Tariff including fees for things such as dispensing unlicensed specials or imports, measuring and fitting hosiery and trusses and dispensing controlled drugs.

Pharmacy contractors also receive an expensive prescription fee equivalent to 2% of the net ingredient cost of items dispensed that cost over £100.

In 2005, the urgent (out of hours) additional fee was removed from the national arrangements. Out of hours arrangements are now commissioned locally by PCTs to meet local need. Information on any locally agreed arrangements in your area is available from the PCT or LPC.

Establishment Payment

The levels of the Establishment Payments are set out in Part VIA of the Drug Tariff.

At the end of each financial year, if the total amount a pharmacy contractor has received through the monthly establishment payments is less than the amount which would have been paid out had the payments been calculated on an annual basis, a pharmacy contractor can claim a 'top up' payment from their PCT. Click on the link below to access more detailed information and a template claim letter:

Claiming an Establishment Payment 'Top-up'

Practice Payments

Practice Payments are a significant element of the funding recharged to PCTs.

All pharmacy contractors are eligible to receive the Practice Payments which include a contribution for the provision of auxiliary aids for people eligible under the Disability Discriminiation Act 1995 (DDA). The payments levels are set out in Part VIA of the Drug Tariff.

Since 1st October 2005, pharmacies have been required to have minimum dispensing support levels in order to receive the full Practice Payment. Reduced levels of payment apply where pharmacists do not regularly employ the prescribed level of support. The requirements are set out in Part VIA of the Drug Tariff. There have been no changes to the required staffing levels up to 2011/12.

These levels do not reflect desirable staffing levels. They are a bare minimum below which no pharmacy could meet the new contract service requirements. For most pharmacies higher staffing levels will be required to provide the new contract services. Pharmacies that cannot demonstrate that they employ dispensing support staff at these levels will only receive the payment levels associated with their actual level of staffing. So for example a pharmacy dispensing 7,000 items a month with staffing levels of 75 hours per week will, from the 1st October, receive Practice Payments at the level for 5,000 items, not the level for 7,000 items. Detailed guidance on making the declaration of dispensing staff hours is available by clicking on the link below:

Guidance on Declaring Dispensing Staff Levels

At the end of each 6 month period between April-September and October-March, if the total amount a pharmacy contractor has received through the monthly practice payments is less than the amount which would have been paid out had the payments been calculated on 6 monthly basis, a pharmacy contractor can claim a 'top up' payment from their PCT. Click on the link below to access more detailed information and a template claim letter:

Claiming an Practice Payment 'Top-up'

The threshold to receive the Practice Payment, other than a contribution for provision of auxiliary aids for people eligible under the Disability Discrimination Act, has risen by 3% to 2,360 items per month.

Previously to October 2008, 10% of the Practice Payment was deemed by HMRC to be subject to VAT. This reflected specific sums that were paid to contractors via the Practice Payment covering the disposal of unwanted medicines and signposting. The increase in the Practice Payment from October 2008 represents increased funding to cover the cost of dispensing medicines which is zero rated. Revised guidance on how the Practice Payment should be apportioned is available in the VAT Section of the PSNC website.

You can also click here to see a chronological summary of key funding changes which may affect pharmacy contractor's payments.

Transitional Payment

In England, Transitional Payments will cease from April 2011. In October 2010 PSNC secured agreement from DH to postpone recovery of £20m excess margin until 2011/12. The removal of the Transitional Payment is intended to recover part of this £20m. The remainder has been recovered by a reduction in the Practice Payment level. Detailed payments levels are set out in Part VIA of the Drug Tariff.

Repeat Dispening Annual Payment

All pharmacy contractors receive an annual repeat dispensing payment of £1500, not only those contractors dispensing repeat prescriptions. This is paid monthly calculated as 1/12th of the annual payment (£125 per month).

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