Page 34 - P4304.1-V115 PS Magazine November 2025
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The impact of Drug Tariff Categories
on dispensing doctor margins
In 2025, it seems that the UK generics market
has become a “race to the bottom,” driven by
continual downward pressure on prices,
particularly under the Category M framework By Caroline Pond
and we are all feeling the pain!
Category M is used by DHSC to manage generic medicine prices to the NHS, and whilst
we all want value for money for the NHS one wonders how low prices need to go before
reimbursement prices barely covering manufacturing and supply costs, let alone offer enough
margin for us as dispensing organisations.
For us in dispensing practice, reduced reimbursement prices on our volume lines will obviously
result in a reduced reimbursement ‘turnover’ and in line with that, a reduced profit-margin £
value and this can only create financial pressures as staffing costs for dispensing these items
does not reduce in line with the reduced cash income that Cat M is resulting in.
Dispensing doctors and pharmacy alike face increasing financial pressures as reimbursement
is shaped by Drug Tariff categories (and clawback) and we really need to think clearly about
what actions we can take in our prescribing and supply behaviours that will really make a
difference.
We cannot live on dispensing fees alone and if those are eroded by negative drug
reimbursement values then we will end up in the red for sure.
Drug Tariff Part 8 categories and their characteristics
Category A – Commonly Prescribed Generics
• Prices based on a weighted average of manufacturers’ and wholesalers’ list prices.
• Predictable but moderate margins.
Category M – Margin-Managed Generics
• Prices adjusted quarterly by DHSC to manage overall dispensing margin delivery.
• Often the largest volume of prescribing, as these are widely used generics.
• Margins fluctuate to manage NHS budget.
Category C – Branded or Specific Manufacturer Products
• Prices linked to specific brands or manufacturers.
• Significant discount opportunities exist, sometimes up to 50%.
• Profitability depends on accessing these discounts; without them, margins collapse
under clawback.
34 PS Magazine |Impact of Drug Tariff Categories Buy direct online at PSUK.co.uk
13/10/2025 14:06:40
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