Medicines reimbursement prices

Generic medicine reimbursement: adjustment to prices

While NHS England is responsible for commissioning pharmaceutical services and determining the amount paid to pharmacy contractors for those services under the Community Pharmacy Contractual Framework (CPCF), the Secretary of State remains responsible for determining the NHS reimbursement prices for the products dispensed.

Payment for services within the CPCF is delivered through a combination of fees and allowances, and the medicine margin. The Department of Health (DH), with the Pharmaceutical Services Negotiating Committee (PSNC), assesses the medicine margin achieved by pharmacy contractors (through a medicines margin survey) and makes adjustments to reimbursement arrangements, as necessary.

As announced by DH, the funding agreement reached between NHS England and the PSNC for the CPCF in 2017/18 was £2.592bn, with £1.792 billion being delivered through fees and allowances, and £0.800 billion delivered through the medicines margin.

The medicine margin survey is by necessity retrospective, as it uses invoices from a sample of community pharmacy purchases. Also, it is powered for resilient results using a full year’s data.

The provisional results from the 2015/16 medicines margin survey indicated that there would be an over delivery on the £800 million medicine margin commitment for 2015/16. In light of this, and as announced in May 2016, DH (after consulting PSNC) decided to decrease generic medicine reimbursement prices (Category M) by £12 million per month from June 2016, with the Drug Tariff amended to reflect this change.

Similarly, the final results of the 2015/16 medicines margin survey and the provisional results for 2016/17 also indicated a continued over delivery of medicines margin.  As a result, DH (after consulting PSNC) reduced Category M prices by £15m from August 2017 for a twelve month period.

This change will also affect dispensing doctors.