Question to the Department of Health and Social Care:

To ask the Secretary of State for Health and Social Care, what steps he is taking to reform NHS Drug Tariff reimbursement to ensure community pharmacies are not required to dispense medicines at a loss.

We already have two arrangements in place to reduce community pharmacies dispensing at a loss and to ensure that overall, they are paid enough as part of their Community Pharmacy Contractual Framework (CPCF) funding. These are the medicine margin arrangements and concessionary prices.

Regarding the medicine margin arrangements, the medicine margin is the difference between the reimbursement price and the price the pharmacy was charged by the supplier. Community pharmacy reimbursement arrangements include an amount of medicines margin that pharmacies are allowed to retain as part of CPCF funding. The Department assesses the medicine margin through a quarterly medicine margin survey, which ensures that in totality, pharmacies are paid the allowed medicine margin above what it cost them to purchase medicines overall.

For concessionary prices, the Department relies on competition and efficient purchasing by community pharmacies to keep prices of medicines down. This has led to some of the lowest prices in Europe and allows prices to react to the market. In an international market this ensures that when demand is high and supply is low, prices in the United Kingdom can increase to help secure the availability of medicines for UK patients. When the market price of a medicine suddenly increases, concessionary prices can be granted in that month, increasing the reimbursement price above the Drug Tariff price, with the aim of mitigating pharmacy contractors dispensing at a loss. In addition, there is a ‘retrospective top-up payment for concessionary prices’, which provides an additional payment to contractors when the margin survey indicates that despite a concessionary price, there was an under payment for a specific product.

More broadly, medicine supply chains are complex, global, and highly regulated. There are a number of reasons why supply can be disrupted, many of which are not specific to the UK and outside of Government control, including manufacturing difficulties, access to raw materials, sudden demand spikes or distribution issues, and regulatory issues. There are approximately 14,000 licensed medicines and the overwhelming majority are in good supply.

While we can’t always prevent supply issues from occurring, we have a range of well-established processes and tools to manage them when they arise and to mitigate risks to patients. These include close and regular engagement with suppliers, and use of alternative strengths or forms of a medicine to allow patients to remain on the same product and expediting regulatory procedures. In addition, we utilise sourcing unlicensed imports from abroad, adding products to the restricted exports and hoarding list, use of Serious Shortage Protocols, and issuing National Health Service communications to provide management advice and information on the issue to healthcare professionals, including pharmacists, so they can advise and support their patients.