Meetings and Conferences

GHP procurement and Distribution Interest Group

A summer symposium of the Procurement and Distribution Interest Group of the Guild of Healthcare Pharmacists took place in Meriden on 7 June. Christine Clark reports

“Fundamental flaw” in prescription charges and generics reimbursement
Medicine supply changes cause VAT complications
Wales on course for a national formulary
Further information

“Fundamental flaw” in prescription charges and generics reimbursement

The flat rate prescription charge scheme and the reimbursement system for generic medicines are both fundamentally flawed, according to Ian Senior, a special adviser at the National Economic Research Association. Work in his department had led to proposals for alternative systems.

Mr Senior said that 85 per cent of NHS prescriptions were dispensed free, although it had originally been envisaged that every patient would contribute something towards the cost. The system denied consumers knowledge and choice. The UK was comparatively slow to adopt new medicines since doctors were under constant pressure to use the cheapest (older) products. There was no social solidarity in this system, since prescriptions were free to elderly millionaires as well as to elderly people of modest means. Cash shortages and postcode prescribing were persistent features.

In a system based on the Swedish model, everyone would pay something, up to a threshold — say, £60 a year. In the Swedish system everyone carried a smart card that kept record of prescription use. The system made people more aware of costs, encouraged them to take responsibility for their own health, and offered personal choice.

Mr Senior’s proposals would result in the average family spending £3.90 a week on medicines. At present the lowest 10 per cent of households by income spent a weekly average of 60p on medicines, but £4.20 on alcohol and £3.70 on tobacco products.

On generics, Mr Senior siad that the temporary shortages in supply in 1999 and the Category D system had encouraged speculative hoarding — normal behaviour in a commodity market. A workable alternative system could be one in which real, ex-factory prices were collected each month and a suitable Department of Health margin was added to generate a realistic reimbursement price. This price could be recalculated every month and published on the web.

Such a system would obviate the need for discounts and clawback and would produce significant efficiency gains.

Medicine supply changes cause VAT complications

Patient group directions (PGDs) and other developments in the way medicines are provided will have important VAT implications, according to Eileen Patching, policy manager for the VAT charities and health care team, HM Customs & Excise.

Medicines were zero-rated for VAT only if the prescription was written by a doctor or dentist, it was dispensed by a pharmacist, it was for a named patient, and the drugs were taken away for use by the patient at home. Those four conditions applied to both private and NHS prescriptions, regardless of where they were written.

Whether the drugs were dispensed in the course of business was also relevant because hospital trusts and primary care trusts supplied medicines as part of their “free” NHS service rather than as a business. Unlike community pharmacists or dispensing GPs, they could not recover the VAT charged when they purchased the medicines. However, the Government’s funding of the NHS covered this cost.

Nurse prescribing was a new situation that did not meet the four conditions, and so VAT at the full rate would normally be due. However, an exception was made for NHS prescriptions, on the basis that the nurse was doing what a doctor would otherwise have done. Medicines for home delivery were zero-rated if the four conditions applied.

Although zero-rating had applied when Relenza was made available using PGDs, this had been a one-off situation. To resolve the issues it would be necessary to consider how PGDs were described in the relevant legislation and to try to make the case that a PGD was a substitute for a GP prescription.

Whether prescriptions written by sessional GPs working in accident and emergency departments attracted VAT depended on where they were dispensed. If they were dispensed by the in-house hospital pharmacy or they were for use in the hospital then VAT at 17.5 per cent was due but if they were dispensed by an independent pharmacy for use at home then zero-rating applied.

Wales on course for a national formulary

The possible development of a national formulary for Wales as part of a national medicines strategy was raised by the Chief Pharmaceutical Adviser to the National Assembly of Wales, Carwen Wynne-Howells. Reviewing the challenges for medicines procurement and supply, she explained that such a strategy was among far-reaching recommendations made in the recent report of the multidisciplinary task and finish group for prescribing in Wales. She noted that there was significant support among doctors for a “white list” of permissible medicines.

Other recommendations in the report included generic substitution in community practice and a call for research into the feasibility of therapeutic substitution. This would change the situation dramatically and create a major educational role for pharmacists.

Ms Wynne-Howells also recommended that NHS staff should read the Pharmaceutical Industry Competitiveness Task Force report, which contained information on many aspects of the industry and likely future developments.

The health service suffered from a lack of skills in all fields, which could not be corrected overnight. Increased use of automation would be important in making best use of the available skilled personnel. Automated dispensing systems involved a large capital outlay but they might not be needed in every district general hospital. Perhaps one or two major centres could handle the work?

Electronic transmission of prescriptions and linking of all health care professionals would also occur. Prescriptions might be sent to off-site pharmacies and mail order pharmacy might develop, as in the United States. This effectively separated clinical pharmacy and medicines management activities.

Advertising of medicines to patients would further fuel consumer involvement. Patients were fed up with arguments between health care professionals. Patients, partnerships and communications would be the watchwords of the new NHS.

Further information

Information about the PDIG’s activities can be obtained from the professional secretary of the Guild of Healthcare Pharmacists, Ian Simpson (tel 01865 202304; e-mail prof.sec@ghp.org.uk).