Reimbursement and Remuneration Structure for Community Pharmacy
Every month the NHS Prescription Services publishes the ‘Drug Tariff’ (DT).
It contains:
● a list of drug prices;
● detailed information on appliances;
● rules to follow when dispensing NHS prescriptions, for example what can and cannot be prescribed on NHS prescriptions and by which class of practitioner;
● amount of fees and allowances to be paid.
Separate DTs are produced for England and Wales, Scotland and Northern Ireland.
NHS Prescription Services produces the DT on a monthly basis on behalf of the Department of Health (DH). It is supplied primarily to pharmacists and doctors surgeries.
Besides the list included in the Regulations (see below), the DT contains many other items of information useful to pharmacists and prescribers.1
LEGISLATIVE BASIS
Section 164 of the NHS Act 2006 as amended states:
(1) The remuneration to be paid to persons who provide pharmaceutical services under this Part must be determined by determining authorities.
(2) Determining authorities may also determine the remuneration to be paid to persons who provide those services in respect of the instruction of any person in matters relating to those services.
(3) For the purposes of this section and Section 165 determining authorities are:
(a) the Secretary of State, and
(b) so far as authorised by him to exercise the functions of determining authorities, the Board or other person appointed by him in an instrument.
(4) The instrument mentioned in 3(b) is called an ‘instrument of appointment’.
(5) An instrument of appointment:
(a) may contain requirements with which a determining authority appointed by that instrument must comply in making determinations, and
(b) may be contained in regulations.
Regulation 89 of the NHS (P & LPS) Regulations 2013 SI No. 349 states:
(1) The DT referred to in Section 127(4) of the 2006 Act (arrangements for additional pharmaceutical services) is the aggregate of:
(a) the determinations of remuneration made by the Secretary of State, acting as a determining authority, under Section 164 of the 2006 Act(1) (remuneration for persons providing pharmaceutical services), but not the remuneration of dispensing doctors; and
(b) any other instruments that the Secretary of State is required by virtue of these Regulations or the 2006 Act to publish, or does publish, together with those determinations, in the publication known as the DT, which the Secretary of State shall publish in such format as the Secretary of State thinks fit.
(2) Determinations under Section 164 of the 2006 Act by the Secretary of State may be made by reference to:
(a) the drugs and appliances dispensed or expected to be dispensed in accordance with NHS prescriptions during a reference period determined by the Secretary of State;
(b) lists of published prices produced by suppliers of the drugs or appliances that are available from them on NHS prescription;
(c) scales, indices or other data that relate to volume and price that are produced by suppliers of the drugs or appliances that are available from them on NHS prescription; and
(d) any other scales, indices or other data (including formulae) by reference to which the Secretary of State considers it appropriate to make such a determination, and in these circumstances, the Secretary of State may provide that remuneration is to be determined by reference to data which is:
(i) in the form current at the time of the determination and (ii) in any subsequent form taking effect after that time.
(3) The DT is to include the arrangements for the claiming of payments by NHS chemists and the making of payments to NHS chemists under it, and:
(a) claims by NHS chemists for payments under the DT must be made in accordance with those arrangements; and
(b) payments under the DT must be made:
(i) by the Board and
(ii) in accordance with those arrangements, subject as appropriate to any deduction that may or must be made in accordance either with those arrangements or with any provision of, or made under, the 2006 Act (including the DT).
DT FORMS PART OF PHARMACY CONTRACT
By virtue of Regulation 11 of the NHS (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013, the DT lists of drugs and appli- ances are incorporated into the Terms Of Service (TOS). In other words, what- ever is in the DT about prices to be paid for drugs and appliances is considered to be something which is agreed by the pharmacist on taking up the contract.
MONTHLY CHANGES
The DT is produced on a monthly basis and the amendments for the month are listed in the preface. The preface bears the words:
In accordance with Regulation 89(3) of the NHS (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013 the Secretary of State for Health as respects England and in accordance with Regulation 18(e) of the National Health Service (PS) Regulations 1992, the Welsh Ministers have amended the Drug Tariff with effect from [date].
Amendments, including prices, come into effect on the date specified, regardless of whether the DT has been received by the pharmacist and regard- less of whether the particular amendment has actually been printed in the DT.
BASIC PRINCIPLES OF PRESCRIBING AND DISPENSING IN NHS
The DT sets out much of the arrangement for prescribing and dispensing for NHS patients. The basic principles of prescribing under the NHS are that:
(1) Doctors may prescribe any medicine, unless its use at NHS expense is specifically prohibited by the Secretary of State or its use is restricted to specified circumstances.
(2) Doctors may prescribe an appliance or chemical reagent, only if its use at NHS expense is approved by the Secretary of State and only in the cir- cumstances specified.
(3) Doctors may prescribe a ‘borderline substance’, only if its use at NHS expense is approved by the Secretary of State and only in the circum- stances specified.
Pharmacists will be paid for any medicines (including over-the-counter (OTC) medicines, homoeopathic preparations and herbal products) provided the item does not appear in Schedule 1 of the NHS (General Medical Services (GMS) Contracts) (Prescription of Drugs, etc.) Regulations 2004, (the ‘Black List’), which is reproduced in the DT as Part XVIIIA.
DT CLAUSES
Clause 1 requires that any drugs supplied must comply with the standard spec- ified in the DT (if any such standard is included). Otherwise, the drug must comply with the relevant standard in the British National Formulary, Dental Practitioners’ Formulary, European Pharmacopoeia, British Pharmacopoeia (BP) or British Pharmaceutical Codex (BPC). The prescriber may indicate that he requires some other standard. If the prescriber has not indicated the stand- ard, and the drug does not appear in one of the relevant publications then the grade or quality must be no lower than that ordinarily used for medicinal pur- poses. There is no other requirement that the drugs or medicines supplied shall be licensed medicinal products (licensed under the Medicines Act 1968).
Clause 2 states that only the appliances listed in the DT may be supplied, and that they must comply with the specifications listed in the DT. Certain items in Part IXA are not prescribable on forms FP10 (CN) or FP10 (PN) and these are marked.
In practice, the ‘Technical Specifications’ of the DT were last issued as a separate document in 1981, although they are available on request from NHS Prescription Services. However, many of the individual entries contain details which in effect are specifications, for example the size of a bandage.
Dressings are included in the category ‘appliances’. Neither the NHS Act nor the Regulations refer to dressings as such except to define them as appliances.
Since June 1998, ‘medical devices’ (as defined in the Medical Devices Regulations 2002 (as amended)) which are supplied on prescription have been required to bear a CE mark.
Clause 3 states that only the chemical reagents listed may be supplied.
According to Section 275 of the NHS Act 2006, ‘medicine’ includes such chemical reagents as are included in a list approved by the Secretary of State for the purposes of Section 126.
Pharmacists are not required to ascertain the purpose for which prescribed items are to be used. All drugs may be supplied except those on Schedule 1.
Pure chemical compounds, organic or inorganic may be supplied as drugs.
Chemical reagents other than those listed could therefore be supplied, and the pharmacist would be paid for their supply.
Clause 4 states that the requirements for the Domiciliary Oxygen Theraphy Service (DOTS) are in Part X of the DT. However, the supply of oxygen by community pharmacies was discontinued by the DH in 2006. All oxygen therapy is supplied by designated contractors – there are four contractors that cover England and one of these also covers Wales.
NHS Boards and Health Facilities Scotland (HFS) (a division of NHS National Services Scotland) began introducing a centralised domiciliary oxy- gen supply system from May 2012 with an expectation that service rollout should be completed by November 2012.
Clause 5 deals with claims for payment. Forms must be endorsed, sorted and despatched as required by NHS Prescription Services or Health Solutions
Wales. The DT contains a number of rules about how prescription forms are to be handled in order for the correct payments to be made.
Failure to despatch the forms on time has previously been held to be a breach of the TOS. Occasional lateness is not considered to be a problem, but persistent and serious lateness is. The late submission of forms to the Pricing Authority causes extra costs and disrupts the system.
Clause 5A deals with the handling of forms for repeat dispensing services.
Clause 6 contains a brief description of the payment systems.
Clause 7 explains the way payments are calculated for drugs. Payment for the quantity supplied is calculated proportionately from the basic price. There is also a statement that if after being requested to properly endorse a form the contractor fails to do so, then the Secretary of State may decide the price.
Clause 8 states that the basic price for drugs, appliances and chemical rea- gents listed in Parts VIII and IX of the DT is the price in the DT. For other generic and branded drugs, it is the manufacturers’ list price.
The Pricing Authority may, under specified circumstances, accept an endorsement that a price higher than the ‘statutory maximum price’ has been paid.
HOW MUST NHS PRESCRIPTION FORMS BE ENDORSED?
Rules for endorsing the forms are found in Clauses 9, 10 and 11, Part III and the Notes to Part VIII.
At the end of each calendar month, the contractor must sort the prescrip- tion forms in a manner directed by the NHS Commissioning Board. They must then be despatched, together with the appropriate claim form, not later than the fifth day of the next month.
The claim form is standard and also contains instructions for sorting.
The forms must be endorsed as required. The intention of endorsement is to ensure that the Pricing Authority has sufficient information to price accu- rately. The principle is that as far as possible the actual price paid by the pharmacist is paid by the NHS. Account is taken of the discounts obtained on purchases by averaging them and deducting an average discount from the totals of list prices.
Clause 9 contains the main endorsement requirements.
No endorsement is needed except for ‘broken bulk’ or where the quantity supplied differs from the order, for
(a) generic drugs listed in Part VIII;
(b) appliances listed in Part IX; and (c) chemical reagents listed in Part IX.
The pack size and name of maker or wholesaler is needed for orders for generic drugs not in the DT.
Where no product is available to contractors at the Part VIII price, the pre- scription may be specially endorsed. This concession is only allowed when the Secretary of State has agreed that the product is not available. The contractor must have made all reasonable efforts to obtain the product at the DT price.
The endorsement must include the brand name or manufacturer or wholesaler of the product, the pack size, the phrase ‘no cheaper stock obtainable’ (NCSO) and be signed and dated on behalf of the contractor.
The Prescription Pricing Authority (PPA) may request additional informa- tion in order to price the prescription.
Clause 10 details the provisions of Paragraph 8 of Schedule 4 of the 2013 Regulations. It allows the quantity supplied to deviate from the exact quantity ordered only in specified circumstances. These are instances where it is par- ticularly difficult to open the container and dispense a part of its contents.
This applies to products which are:
● sterile;
● effervescent or hygroscopic;
● liquid products for addition to bath water;
● coal tar preparations;
● viscous external preparations;
● packed in a castor, collapsible tube, dropper bottle, pressurised aerosol, puffer pack, roll-on bottle, sachet, shaker, spray, squeeze pack, container with an integral means of application or any other container from which it is not practicable to dispense the exact quantity.
There is a list in Part II of products which are:
● liquid products for addition to bath water;
● coal tar preparations; or
● viscous external preparations.
Broken Bulk
Clause 11 sets out the rules whereby a contractor may be paid for the whole amount of a drug when less has been supplied. The rules appear to set out an objective test – that the remainder cannot readily be disposed of – whereas in practice a subjective test is used. The contractor may claim if he believes he will not readily dispose of the remainder. Subsequent supplies are deemed to have been made from the remainder for the next 6 months or until the remain- der would in any event have been used up.
The Pricing Service interprets the ‘broken bulk’ facility by using a ‘two- thirds’ rule. If a contractor receives two or more prescriptions in the same cal- endar month, totalling more than two-thirds of a pack, the pricing authority assumes that this establishes usage and so considers the broken bulk claims as invalid.
In a service case where a contractor made a large number of broken bulk claims which were unjustified, the then FHSA decided that constituted a breach of the TOS and recommended a very large withholding. The conduct was also regarded as fraud by the Crown Court, resulting in a heavy fine.
Miscellaneous Matters
Clause 12. Out of pocket expenses over 50 p may be claimed in certain circumstances.
Clause 13 extends the broken bulk rules in Clause 11 to allow for the payment of the full cost of using reconstituted products with a short life.
PRICES IN PART VIII
Part VIII contains a list of generic drugs which, if ordered on an NHS pre- scription, will be reimbursed to the pharmacy at the prices stated.
List Prices
Pharmacists are paid the DT basic price for dispensed medicines, less a dis- count as set out in Clause 6. If a drug is included in Part VIII, the price shown will be used for reimbursement regardless of what a pharmacist has dispensed to meet the order.
Exceptionally, when the DH has identified a shortage of a Part VIII generic, it may grant that product NCSO status. The pharmacist can endorse the form ‘NCSO’ and receive a payment based on what he has supplied.
For products ordered and supplied as a branded product, that DT basic price is the usual wholesale list price.
For generics, the price paid is usually set out in Part VIII. For products not listed, there the price will be the wholesale list price.