Page 35 - P4403.59-V50_Numark Magazine April 24

How is margin measured?

As part of the official recognition of margin as a legitimate income stream,
a ‘Margin Survey’ process was developed in collaboration between CPE and
the Department of Health and Social Care. The concept was that the margin
retained by pharmacies would be measured directly at pharmacy level, using
pharmacy data.

To achieve this, the Margin Survey was designed by a professor of statistics
and validated by CPE’s own statistician. It was agreed by all parties that
only purchase data from independent contractors (defined as groups of 1-5
pharmacies) would be used. The Margin Survey gathers purchase data for a
sample of drugs from a sample of independent contractors, which is then used
to estimate the margin earned at a national level.

Because only independent contractors are
involved, the margin survey treats the market as
independent.

Margin Survey process:

Contractor and Invoices are Sampled drugs are
drug samples collected from the identified from the
are drawn by sampled contractors, scanned invoices, and a
DHSC, and scanned by NHSBSA, database populated with
checked by CPE. and shared with CPE. all purchase information

End of quarter
adjustments are Initial margin results
calculated by DHSC/ are calculated All data is verified
CPE and applied to the by DHSC and by CPE.
quarterly margin result. investigated by CPE.

At every stage of the process CPE performs in depth checks of data validity,
calculations and results. The results from each survey period are lagged by
around six months. When results become available, they are used to inform the
price setting for the next Category M list (e.g. margin measured for the April-
June period would impact the next January-March Cat M list).
How we make sure it’s accurate

Community Pharmacy England perform a suite of checks to corroborate the
validity and robustness of the Margin Survey. CPE is supplied with margin data
and price trends from various external sources, such as:
a. Data directly from English and UK wide pharmacy companies

b. Data from buying groups
The tracking of these external sources has shown a strong correlation with
results from the Independent Pharmacy Margin Survey, over many years of
assessment.

CPE is always considering what other data sources
or methods could be leveraged to perform further
validations or checks of the Margin Survey.

Read part two in next month's issue. 35

13/03/2024 15:32:17
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P4403.59-V50_Numark Magazine April 24.indd 35 13/03/2024 15:32:17