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Introduction of Category M pharmacy remuneration predictable but

Category M was introduced in April 2005 as downward price adjustments in recent years
have put financial pressure on pharmacies and
part of the Drug Tariff in England and Wales. dispensaries with declining profit margins on
It was designed to improve the accuracy of generic dispensing.
reimbursement prices for generic medicines
dispensed in community pharmacies. This Reflecting on 2025 and our opportunities
reform followed concerns that the previous we must acknowledge they are still there
system did not adequately reflect the true they are just different. High-cost brands are
market price of generics and that pharmacy fewer and low-cost prescribing is the norm.
or dispensary profits from generic dispensing We need to work differently to benefit from
were unpredictable. the high volumes of generics we supply and

Category M drugs are generics with make sure all the small wins add up. This
means we all need to understand the business
reimbursement prices determined by the as it stands today, not just the lead GP or
Department of Health and Social Care (DHSC) the Dispensary manager who, after all, are
based on actual market purchase data probably anticipating retirement if they were
collected from manufacturers and wholesalers. around pre 2005! Please don’t let them go with
NHSBSA and the DHSC assess the difference all their knowledge never shared. In the same
between what we pay for generics and vein though, if someone has been taking the
what we are reimbursed. If excess margin is lead in the dispensary for the last 20 year, is
detected, the DHSC adjusts reimbursement their knowledge up-to-date or are you stuck in
prices downward. If margins fall below the a 2005-time warp way of working?
target level, prices increase. Category M prices
are then adjusted quarterly to ensure margins In 2025, take a reality check on your business
remain within the agreed target and build on the opportunity it offers in the
current marketplace. It is still a good business
Initially, in the noughties, Category to be in it just isn’t quite as easy to run
M increased margins by ensuring fairer successfully as it was back in 2005.
reimbursement for generic drugs but there
have since been significant cuts to Category M
reimbursement, particularly in 2017, when £180
million was removed from the funding pot and
because Category M prices are based on past
purchase data, they sometimes lag behind
real-time market changes, causing under-
reimbursement when generic prices spike (e.g.,
due to shortages or supply chain disruptions).
As we all know, sometimes it is simply
impossible to source medicines at a lower cost
than the reimbursement price, reducing profit
margins. The vast number of price concessions
we have seen in 2024 illustrate this issue.
So, in other words, since its introduction in
2005 the Cat M system has helped to control
NHS spending on generics while keeping

34 PS Magazine | What a difference 20 years makes Buy direct online at PSUK.co.uk

14/03/2025 16:24:08
P4304.1-V108_PS Magazine - Apr 25.indd 34
P4304.1-V108_PS Magazine - Apr 25.indd 34 14/03/2025 16:24:08