The drug reimbursement system in England is in ‘significant peril’, Community Pharmacy England’s director of pharmacy funding Mike Dent has said.
This comes as the £100m in additional margin allowance that was granted back to the sector last April has been phased out.
In the new drug tariff, the government has also made a downward adjustment to bring the baseline back to £200m per quarter.
And it contains adjustments of reimbursement prices including of Apixaban 2.5mg and 5mg tablets, which CPE said was ‘reflective of the rapidly falling purchase prices of generic Apixaban tablets’.
Mr Dent warned that the ‘long term restriction of Drug Tariff prices’ was ‘driving significant dysfunction within the medicines supply chain’.
He added: ‘The English reimbursement system has led to consistent downward pressures on medicine prices over the years, which the NHS has reaped significant long-term benefits from. However this system is now in significant peril.
‘Many medicines are experiencing major and long-term supply disruptions, and pharmacy businesses risk losing hundreds or thousands of pounds a month on some medicines, due to the difference between prices they can procure medicines for and what the NHS will pay them.’
And he added that the price concession system had been running at what would previously have been considered an ‘extreme’ level ‘for almost two years at this point’.
And he warned that the current system was ‘no longer viable’, saying that ‘attempts to suppress medicine prices at all costs’ had ‘damaging ramifications for medicine supplies in this country, and is ultimately harmful for patients’.
Speaking at a conference hosted by pharmacy support service Avicenna this month, CPE chief executive Janet Morrison had warned that based on a record number of price concessions approved by the government before Christmas 2022, the government had determined that the community pharmacy sector had retained too much margin.
‘One of the pressures we now have is before Christmas, the government approved a lot more price concessions,’ Ms Morrison told delegates at the conference last Saturday.
‘They are now calculating the impact of that is that there has been too much retained margin, and therefore they’ll squeeze the drug tariff further.’
But in today’s statement CPE said that at the negotiator’s request, no further adjustment had been made to recoup the over-delivery measured in Q4 2022/23.
However, it said that downward adjustments made in previous quarters to recoup over-delivered margin were maintained, and that it would be discussing next steps with the Department of Health and Social Care (DHSC) over the next few months.
At the Avicenna conference, Ms Morrison had warned that a growth in the total number of items being prescribed meant that the total fixed amount of margin allowed to the sector was now being ‘spread more thinly across all of the dispensing that we do, which is therefore delivering reduced margins’.
And she said that that the ‘cyclical’ process of the government granting price concessions and then reducing the drug tariff ‘raises the longer-term question about how margin is calculated and delivered’.
Ms Morrison added that CPE was thinking beyond its current negotiations about the recent £645m promised to community pharmacy and the next one-year contract, to the ‘future foundations for the contract’.
‘What we have to do, therefore is to have a fundamental rethink of how we are funded and what the contract should contain in terms of the best models of payments for community pharmacy,’ she said.
She pointed to the King’s Fund and Nuffield Trust report, commissioned by CPE and published shortly after Ms Morrison’s comments, which mooted some potential funding models for the sector.
Also speaking at the conference, Avicenna’s sales and purchasing director Brij Valla expressed concerns about the future of drug tariff pricing.
And he reminded contractors that changes to the discount deduction arrangements meant that they should expect to be reimbursed at 80% of the drug tariff price for generic medicines.
‘You cannot base your remuneration from the drug tariff, because there is a discount which is applied,’ he said.
Under new discount deduction arrangements, which will apply to all items from January 2024, contractors will be reimbursed 9.85% less than the drug tariff rate on appliances, 20% less than the drug tariff on generics and 5% less than the drug tariff on branded medicines.