The Pharmaceutical Journal
Vol 269 No 7208 p123
27 July 2002

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European directive may help contract negotiations

The Government is considering the implications for pharmacy contractors of a European directive against late payments in commercial transactions. The Pharmaceutical Services Negotiating Committee may try to use the directive as a lever to get a better deal in the forthcoming new contract.

At the end of every month, contractors send the prescriptions they have dispensed during that month to the Prescription Pricing Authority for payment. The National Health Service pays pharmacists 80 per cent of the estimated value of those prescriptions at the beginning of the following month and the balance at the beginning of the month after that.

Directive 2000/35/EC sets a benchmark of 30 days for the payment of bills, starting from the date of any invoice, with a statutory right to interest at 7 per cent above base rate after that unless any different payment period has been agreed. There is a proviso that any different payment period is not enforceable if it is "grossly unfair" to the creditor. Member states can decide to set a 60-day deadline for the commencement of interest, but if they do so they have to prohibit contractual variations.

Replying to a Parliamentary question for written answer on 16 July, Parliamentary Under-Secretary of State for Health David Lammy told Brian Cotter (Lib Dem, Weston-Super-Mare) that he did not consider the Late Payment of Commercial Debts (Interest) Act 1998 to have any bearing on pharmacy payments, but the position in relation to the European directive was being reviewed.

Godfrey Horridge, the PSNC's financial executive, said that the timing of payments was something that the PSNC wanted to discuss with the Government. He said that an interest payment of 3.25 per cent above base rate had been built into the cost-plus contract that came to an end in 1989. Although the Government insisted that this continued in the current contract it had been impossible to get figures that proved it.