Pharmacy Management and Business Flashcards
Economic framework controlling community pharmacy:
• Responsibility for the profitability of community pharmacies lies entirely with pharmacy owners
• Not all pharmacies provide NHS services, although the vast majority do
• Most pharmacies are in retail locations, rather than an integral part of NHS facilities but this is changing
• Across the sector, NHS provides the major source of income
- Remuneration
- Reimbursement
How do you make a profit in pharmacy dispensary?
- No. of prescriptions dispensed
- Payment for services
- Accurate remuneration and reimbursement
- Cost containment
- Quality payments
What is remuneration?
- Remuneration, i.e. payment for NHS services, determined by Department of Health and Social Care (DHSC)
- “global sum” for NHS pharmaceutical services in England
- fee structure and conditions for individual pharmaceutical services and meeting pharmacy quality scheme requirements
What is reimbursement?
, i.e. arrangements for repayment of costs of medicines dispensed against NHS prescriptions, determined by DH
What is the price at which…
a) Community pharmacies are reimbursed for dispensing NHS medicines? and
b) GP prescribing budgets are charged for NHS prescriptions?
• For branded products, the manufacturer’s NHS list price
• For generic products, the current Drug Tariff Price
(Drug Tariff published monthly by NHS prescription Services available online www.nhsbsa.nhs.uk)
Cost control of generic products dispensed under NHS
NHS reimbursement price paid to community pharmacies fixed for individual product
• regardless of actual price paid by individual community pharmacy
• determined and updated monthly by Department of Health (DH)
• listed in Drug Tariff
Parallel importing/exporting of medicines:
- Trading of medicines within EU, arising from price differences between Member States
- Until recent weakening of GBP against Euro, many licensed medicines could be bought more cheaply from other EU countries
- medicines imported, labelled in English and dispensed against NHS Rxs
- Currently profitable to sell (export) medicines from UK to other EU Member states
- resulting in well-publicised shortage of some medicines
What problems are caused by stock shortages?
- Decreased satisfaction with patient pharmacist relationship
- Substitution cause confusion for patient and pharmacist
o Patient safety issue - Reduced compliance
o Worsening of condition - Inconvenience
o Patient - Increased pharmacy workload
o Double dispensing
o Phone calls
Adjustment for Discounts to Community Pharmacies:
- Community pharmacies buy medicines at less than list price through wholesaler discounts, bulk buying, parallel importing etc
- DH estimates differences between actual costs and list prices
- Applies a discount deduction scale (listed in Part V of Drug Tariff) to reimbursement of community pharmacy based on monthly total of prices of NHS dispensed medicines
For a contractor who dispenses NHS Rxs in a month for:
- Branded products worth £30,000
- Generic products worth £10,000
Monthly reimbursement = £40,000 (100% - 9.6%) = £36,160
Behaviour induced by cost control mechanisms on pharmacy owners:
- Attempt to purchase medicines cheaper than listed price
- Bulk purchasing
- Parallel importing
- Attempt to increase the level of discount beyond NHS scale (scale reviewed annually)
- Minimise CP stock levels
- commonly affects availability of medicines to dispense NHS Rxs
What other costs are there involved in running a community pharmacy?
- Staff costs
- Training
- Rent
- Utility bills
- Equipment
- Stock loss
- Loss due to incorrect claims
- Collection and delivery
Hospital Pharmacy (NHS Trusts). • Receives income via:
– Payment by national tariff introduced 2014
• NHS England decides which healthcare services should have a national price
• Monitor sets the price
• Mechanism for reimbursing hospitals for their activities
• The tariff contains fixed prices that reflect national average prices for hospital procedures
– Achievement of CQUIN (Commissioning for quality and innovation) indicators
- Non-profit organisation
- Exposed to current strict financial restraints
- Operates in target driven health service
What is CQUIN?
Commissioning for quality and innovation) indictors
• Reflects ambitions of the 5YFV and NHS mandate
Control of costs in hospital
• Aim to increase efficiency, effectiveness and reduce costs
• Promotion of efficient and rational use of medicines via Drug and Therapeutic committees
• Other approaches include:
– Home care services
– NHS procurement division
– Skill mix
– Patient’s own drugs
– Recycling drugs (e.g. seretide inhalers)
