Page 31 - P4403.59-V51_Numark Magazine May 24 DIGITAL

Price concessions

When pharmacies are unable to source a medicine at or below the Drug
Tariff price, CPE can apply for emergency ‘price concession’ status to
be granted for that medicine. This means pharmacies will be reimbursed
a higher price, for the month that the price concession is granted.

Any medicine granted price concession status will have
0% discount deduction applied for the month in question.

Over the last two years there has been a significant rise in the number of price
concessions granted on a monthly basis, reaching close to 200 items in a single
month in some cases.

The impact of market disruption on pharmacies

Initially in 2005 the sum of allowed margin was set to £500m per year. This then
increased to £800m per year from 2014. Since 2014, the annual allowance for
margin has not grown, although there has been a significant increase in overall item
volumes dispensed by pharmacies. This inevitably means that the margin allowed
‘per item’ has decreased over time, which drives increasing pressures directly on
pharmacies, and indirectly on the supply chain.

The system has greatly benefitted the NHS over many years, as pharmacies are
continually compelled to seek lower and lower purchase prices for medicines.
Pharmacies are driven to seek better prices to ‘beat the average’ and maximize their
own returns, and maintain profitability in their businesses.

This continual pressure on the market has reached the point where we are seeing
significant dysfunction. Pharmacies report hundreds of different products being
either unavailable, or only available at significantly inflated prices.
The strain that the current levels of market disruption are causing for pharmacies is
unsustainable. The resources required for sourcing these products is exponentially
greater than what is required in normal functioning market conditions. The situation
for pharmacy contractors is made even worse as many concession prices are set at
a level which many pharmacies simply cannot procure at.

CPE is clear that contractors cannot subsidise the NHS medicines bill and
that it is untenable for there to be such a difference between concession
and market prices for particular medicines. The concessions system is not
coping with the current price volatility in the market.

While the pressures on pharmacy teams to try and procure many medicines
are overwhelming, there is also significant disruption and stress caused for
patients, who in many cases are unable to get their medicines in a timely
fashion, or at all. CPE is continuing to press both DHSC and the NHS to act
to stabilise the supply chain, and reform the price concession system.

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