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Pharmaceutical Services Negotiating Committee

Frequently Asked Questions

Use the following links to find frenquently asked questions on different aspect of funding:

General queries

2012/13 Funding

Category M

Devolved global sum

You can also view the Funding FAQ Archives for older FAQs. 


General

How does PSNC ensure the agreed funding is delivered?

Overall funding is monitored at a national level by PSNC to ensure that all income due to community pharmacy has been paid out. PSNC works in conjunction with the Department of Health to audit payment levels to pharmacy contractors.

As part of the Contract funding arrangements, it was agreed that £500m would remain in retained purchase margin through generics and other purchases. As discussed above, PSNC is continuing to work closely with the DH to monitor and ensure the availability of the guaranteed £500m purchase profit. This is measured and monitored using regular margin surveys into the actual purchase prices paid by independent pharmacy contractors. This monitoring is vital to ensure that this source of funding is and continues to be available.

Why is the £500m NHS pharmacy funding delivered through purchase profit income not increasing?

When the contract was introduced in 2005/6, the total funding agreed for the year was £1,766m. The total funding agreed for 2011/12 was £2,526m. Each year the total funding for pharmacies has increased.

This funding is delivered through a mix of fees, allowances and guaranteed purchase profit. The value delivered via guaranteed purchase profit (£500m per annum) has remained the same since 2005/6 but as the total funding has increased each year, this means that the proportion of funding delivered through purchase profit as opposed to fees/allowances has reduced. This has been a policy decision.

2012/13 Funding arrangements

Are the Department of Health clawing back excess purchase profit earned in the first half of the year?

No. From the results of the 2011/12 survey into retained buying profit, it was estimated that purchase levels were exceeding target level in the first half of 2012/13.

To ensure that in the second half of the financial year only the agreed levels of purchase profit income are available to contractors, Category M prices and Practice Payment levels are being reduced, equating to approximately 45p per item.

This is not a retrospective clawback; rather it is an adjustment in the rate of funding delivery to ensure the correct level of funding will be delivered in the financial year. For information on how the Margins Survey effects pharmacy reimbursement please visit the Margins Survey section.

When will the funding changes begin to affect my payments from NHS Prescription Services?

The changes to the funding arrangements will take effect for prescriptions dispensed from 1st October 2012. Prescriptions dispensed in October must be submitted to NHS Prescription Services for pricing before the 5th of November. Contractors will receive an advance payment for October's prescriptions in early December. In early January, once NHS Prescription Services has completed the pricing of October's prescriptions, the remaining balance will be paid. They payment that will be made to contractors in early January will be the first payment to reflect the new payment levels.

Category M

If the manufacturer increases their list price for a branded medicine, when will this be applied by NHS Prescription Services for reimbursement purposes?

As prices in the market are constantly changing, there is an agreed mechanism in place to increase and decrease the reimbursement prices for medicines.

For proprietary preparations and Part VIII products where the price is based on a proprietary product (e.g. most Part VIII Category C products), a price change up to and including the 8th of the month takes effect for prescriptions dispensed in the following month. A price change after the 8th of the month will be applied for reimbursement purposes to prescriptions dispensed one month later.

For example, if the manufacturer's list price for a proprietary product changed on the 6th of November, the new reimbursement price would apply to prescriptions dispensed in December. If a manufacturer's list price changed on the 15th November, the new reimbursement price would apply to prescriptions dispensed in January.

For non-proprietary or generic drugs (including Part VIII, Category A medicines but excluding products in Part VIII, Category M) the reimbursement price change takes place one month earlier that proprietary medicines. For example, if the manufacturer's list price changed on the 6th of November, the new reimbursement price would apply to prescriptions dispensed in November. If a manufacturer's list price for a generic drug changed on the 15th November, the new reimbursement price would apply to prescriptions dispensed in December.

The reimbursement prices of category M medicines are changed quarterly.

When will contractors see some stability in Category M prices?

Some instability in Category M prices is to be expected becasue they are commodity products. Indeed changes in relative prices are driven by changes in manufacturers' prices. In addition to this annual changes are made to Category M prices to reflect the findings of the profit monitoring inquiries. Changes in general price levels at other times reflect either an under- or over-recovery due to actual volumes being different to the forecast volumes used in the calculations.

Why are some Category M prices so high?

A number of lines known as niche lines appear to have excessively high prices. The DH is aware of this and recently put plans in place to reduce the price of one of these, Phenytoin. The cost saving was factored back into higher prices for other lines within category M. PSNC is pressing the DH to reduce the prices of other niche lines.

Devolved global sum

What is the Global Sum?

The Global Sum was the centrally held funding for the provision of pharmaceutical services, such as dispensing fees. From 1 April 2010 it is no longer held centrally by DH. It is worth £1.1 billion.

What does devolving the Global Sum mean?

In line with policy to devolve centrally held funds to PCTs, the DH devolved the Global Sum to PCTs on 1 April 2010. It brings pharmacy funding in line with other funding streams, e.g. general practice dispensing doctors, dentists and ophthalmic services. By devolving the global sum, the PCT will fund all prescribing and dispensing costs. It significantly increases the funding held by PCTs dependent on prescription volume.

What significance does this have for me as a pharmacy contractor?

As outlined above, all the funding for the Community Pharmacy Contractual Framework (CPCF) now sits with the PCT. However, total core funding to be paid for the CPCF will continue to be set at a national level. Fees and allowances are set out in the Drug Tariff and contractors will continue to submit monthly returns to NHSBSA, who will make payments to contractors.

Alongside devolving the Global Sum, the way in which a PCT is recharged for the services provided has changed. Each PCT is recharged the Establishment payment for each pharmacy located in its area, the professional fees relating to prescription items directly attributable to its prescribers and others costs that are fair shared in proportion to the professional fees directly attributable to its prescribers.

The temporary safeguarding measures are available to those contractors providing pharmaceutical services under the CPCF. Those contractors operating under a Local Pharmaceutical Services (LPS) contract, excluding Essential Small Pharmacy Local Pharmaceutical Services (ESPLPS), will need to contact their PCT to discuss the terms and conditions of their contract.

May I make a claim for extra funding for any other reason apart from the duration of prescriptions having increased, e.g. a new GP surgery has opened in my area?

No. This payment mechanism is being put in place to provide temporary support to contractors following the devolving of the Global Sum. When making a claim, it is necessary for the contractor to sign the claim, declaring that there is no other reason for the increase in supplier bill. Where it is discovered that a contractor has made a false claim, there is a possibility the issue will be passed to NHS Counter Fraud Services for investigation.

May I make a claim for extra remuneration for any other reason apart a significant drop in fees earned following an increase in duration of prescriptions, e.g. a new pharmacy has opened in my area?

No. This payment mechanism is being put in place to safeguard contractors following the devolution of the Global Sum. When making a claim, it is necessary for the contractor to sign the claim, declaring that there is no other reason for the decease in fees earned. Where it is discovered that a contractor has made a false claim, there is a possibility the issue will be passed to NHS Counter Fraud Services for investigation.

Will my PCT be informed that I am making a claim?

Yes. Although, permission will not typically be sought from the PCT before the payment is made. However, there may be situations where a claim will fall outside of the conditions agreed by DH and PSNC, e.g. if no evidence is provided for the claim. In these instances, the claim will be subject to joint verification by the PCT and the contractor's Local Pharmaceutical Committee (LPC), subject to agreement with the contractor on LPC involvement.

Where is the money coming from to pay this?

Reimbursement claims result in an increased advanced payment, paid for the cost of products dispensed during the month but before prescriptions have been fully processed and accurate reimbursement is known. Advanced payments are not attributed to any specific PCT, however, in the following month when prescriptions have been processed and the accurate amount that should be paid is known, the prescribing costs are attributed to the prescribing PCT .

Remuneration claims will be recharged to the PCT of the contractor and will be reflected in the Itemised Prescribing Payment (IPP) report for the month's dispensing. It will be reported as "other payments charged to the PCT".

The £30 "amendment allowance" payable to contractors who have made at least one claim per quarter will also be recharged to the PCT of the contractor.

I am on the border and my PCT has not instigated this change - why should they pay for what other PCTs have implemented?

Due to the complexity of NHSBSA Information Systems, the prescribing and dispensing data are summarised in different databases. Therefore, it is difficult to link back and attribute the contractor payments to individual practices and PCTs where these are not based on individual prescriptions. However, where a PCT is being recharged payments to their contractors for changes implemented by other PCTs, they may wish to seek redress from the PCT who has implemented the action.

How long will these measures be in place?

It is intended that these measures are temporary. DH, PSNC and NHS Employers have agreed to review the payment structure of community pharmacy services to reduce the dependency on prescription volume.


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