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Contractors hook a new funding deal
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The wait is over: a book describing the
details of the proposed community pharmacy contract in England and Wales
was sent to contractors this week. Importantly for pharmacists in England
it describes how the new contract is to be funded; funding in Wales is
still being negotiated.
The deal, if accepted, will certainly mean that pharmacists’ jobs
and pay in April 2005 will be different from what they are today.
Barry Andrews, chairman, Pharmaceutical Services Negotiating Committee,
says that after years of pharmacists having an unrecognised and unsatisfying
role in primary care and the NHS, as well as insecure funding, they are
finally getting a contract that addresses these concerns. Most importantly,
he says: “These are not changes that have been forced upon us but
ones we believe pharmacists want.”
The structure
of the new contract has been described in detail before
(PJ, 18 September, p385). To summarise, it consists of a national contract
that is made of two tiers: essential services, which all pharmacists
must provide, and optional advanced services. Enhanced services form
the third tier of the contract and provision of these is to be negotiated
locally with primary care trusts.
So how will the new contract be funded? The total funding — £1,766m — was
announced earlier this year. What was not known, until this week, is
how this sum is to be distributed. In 2005–06, nearly all of it — £1,669m — will
be used to fund essential services. Of the remainder, £39m will
be used for advanced services and £58m will be to fulfil new IT
requirements (see Panel below).
IT requirements and funding in the new contract
Pharmacists will need new IT in order to deliver the new contract,
for example, for the introduction of electronic transmission of prescriptions
(ETP) and accessing the NHS Care Records Service. So pharmacists
will have to use a pharmacy system which is compliant with the National
Programme for Information Technology in the NHS. They will also need
to connect to N3 (the successor to the NHSnet) and there will be
a choice of connection methods. Minimum connectivity requirements
will be specified once the funding has been agreed.
Once the pharmacy has sufficient connectivity (in terms of both quality
and speed of connection), has an NPfIT-compliant system installed
and has agreed to transmit prescriptions electronically to the Prescription
Pricing Authority, it will receive a one-off allowance for initial
connection. Pharmacies will also receive an ongoing allowance for
connectivity.
How much these figures will be has yet to be agreed since the cost
of NPfIT-compliant pharmacy systems is not yet known. But it can
be speculated, by dividing the £59m total funding between the
10,000 community pharmacies in England, that it will amount to about £6,000
per pharmacy for both initial connection and ongoing maintenance.
Initial compliance testing of the new NPfIT-compliant systems will
begin in December. “We expect to see systems marketed in the
early part of next year,” says Mrs Sharpe. ETP will then be
rolled out from early 2005. |
The sum for advanced services seems small,
but Sue Sharpe, chief executive of the PSNC, is reassuring: “We
have to allocate a considerable amount of money in the first year to
IT-enable pharmacies. In future,
we expect a substantial increase in the money available for advanced
services.”
The new global sum is £866m, up from roughly £800m in England
this year. A new payment for repeat dispensing has been set at £100m.
And the remaining £800m comes from profits on drugs purchasing.
This is the first time that the Government has recognised the income
that pharmacists have from purchasing medicines, despite the fact that
it is something that all contractors depend upon. Currently, it is estimated
that the total sum contractors make from retained purchase profit is
about £800m. Under the funding arrangements for the new contract,
the Department of Health will remove £300m from retained purchase
profit by reducing Drug Tariff reimbursement prices for generics. This
money will then be used to fund the national pharmacy contract. The other £500m
will become a guaranteed source of income. The DoH and PSNC have agreed
to monitor and adjust the prices of generic medicines available to independent
pharmacies to ensure that the agreed level of purchase profit income
is obtainable.
So the new contract puts contractors in a better financial position for
two reasons. First, there is new money in this contract. Adding the figures
up, the increase in the global sum plus the new payment for repeat dispensing
gives a total of about £166m of new money. But on top of this,
profits on drugs purchasing will become a guaranteed income rather than
the vulnerable income it is now.
“
Contractors should be better off under the new contract,” says
Mrs Sharpe. Mr Andrews agrees, but adds that income will vary according
to the volume of generic prescriptions and purchasing skills of the contractor. “But
purchasing income is now secured and that is worth an enormous amount,” he
comments.
The PSNC stresses that this contract is sustainable in the long term.
In future, the global sum will be adjusted to recognise increases in
staff costs and dispensing volume. The PSNC and DoH will consider, every
three years, whether a cost inquiry is needed.
How pharmacists will be paid
Direct comparisons of payment under the old and new contracts is difficult,
warns Mrs Sharpe. The PSNC’s new contract book contains detailed
breakdowns of the income contractors can expect so the best approach
contractors can take is to work out their predicted income from these.
A few examples of indicative annual income for essential services are
given in Table 1 (below).
Table 1: Examples of annual income (£)
for providing essential services in 2005–06
|
Items per annum |
Income
from fees and allowances |
Estimated average
buying profit |
Indicative
total income |
24,000 |
52,321 |
17,457 |
69,778 |
48,000 |
84,964 |
34,914 |
119,878 |
84,000 |
131,196 |
61,100 |
192,295 |
120,000 |
177,427 |
87,285 |
264,713 |
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Payment for essential and advanced services
is separate. “Each
stands alone. There is no cross-subsidy,” says Mr Andrews.
A detailed service specification for each essential service is included
in the PSNC book and they have also been described in the Contract
2005 series
of articles published weekly in The Journal since 18 September.
To summarise, there are eight
essential services that contractors will have to provide to get funding:
· Dispensing (eventually to include electronic transmission of prescriptions)
· Repeat dispensing
· Disposal of unwanted medicines
· Promotion of healthy lifestyles
· Signposting
· Support for self-care
· Support for people with disabilities
· Clinical governance
Payment for providing essential services will include a fee per dispensed
item and some special fees and allowances. The new item fee will be 90p
per dispensed item, down from the current 94.6p. There will also be payments
for dispensing Controlled Drugs, an expensive prescription allowance,
and fees for measuring and fitting appliances.
The first of the special allowances is an
annual establishment payment which will
replace the existing professional allowance. The establishment fees will
be paid for pharmacies dispensing more than 2,000 items a month. In 2005–06,
it will be £21,821 for pharmacies dispensing more than 2,500 items
a month (and less for pharmacies dispensing between 2,000 and 2,500 items).
These payments will be adjusted annually.
On top of this, pharmacies dispensing more than 1,100 items a month will
receive a new payment called a practice payment. The idea of the practice
payment is to increase the quality of service. For the majority of contractors
(all those that dispense more than 2,000 items a month), it effectively
adds 24.2p to the item fee. To be eligible for payment, pharmacies will
be required to have a minimum number of dispensing support staff in addition
to the pharmacist. The staffing levels range from half a full-time equivalent
person for a pharmacy dispensing 3,500 items a month to three full-time
equivalent people for dispensing 11,000 items. The PSNC points out that
these staffing levels do not
reflect desirable levels; just the bare minimum below which no pharmacy
could meet the new contract service requirements.
Special arrangements have been made for pharmacies that dispense fewer
than 2,000 items a month. Those that dispense more than 1,100 items are
currently eligible to receive the professional allowance and they will
continue to receive this for the first three years of the new contract.
Mrs Sharpe says that the total number of pharmacies falling into this
category is under 100.
In addition, the PSNC has negotiated exit payments for pharmacies that
would prefer to close than operate under the new contract. The payment
will amount to a year’s worth of the global sum professional allowance.
This option will only be available during the first year of the new contract
and certain conditions will apply. Mrs Sharpe says that she will be surprised
if more than a few dozen contractors decide to take the exit payment.
There will be another option for low-volume pharmacies. The PSNC is currently
discussing with the DoH and NHS Confederation the development of a new
local pharmaceutical service
(LPS) which would raise income for low-volume contractors. In addition,
the essential small pharmacy scheme arrangements will continue for pharmacies
located more than 1km from the nearest other pharmacy and an LPS for
essential small pharmacies is being considered.
Pharmacies dispensing fewer than 1,100 items a month do not receive a
professional allowance now so they will not be disadvantaged by the new
contract. In fact, they could be better off if they start providing advanced
or enhanced services.
In addition to the essential services,
advanced services are also included in the
national contract. Once contractors have met the essential service requirements,
they will be able to move on to providing advanced services. These are
medicines use review and prescription intervention service. Both consist
of the same medicines
review, the only difference is the way in which
they are initiated (PJ, 23 October, p602).
Payment for advanced services will depend on the number of reviews a
pharmacist carries out. The fee, at £23 per review, should cover
staff costs, allowances for premises conversion, booking appointments,
administration and fair return. A limit to the number of reviews each
pharmacy can undertake will be imposed in the first year of the new contract
at 200 reviews.
The funding for 2005–06 equates to about £4,000 per pharmacy. “We
expect that figure will probably double in the future,” says Mrs
Sharpe. Although in the early days of the contract, relatively few contractors
will be offering advanced services, she expects that about 50 per cent
will have them in place by the end of the first year. “All pharmacists
will begin to recognise that from their regular
patient base, this is going to become a valuable service. It will be
detrimental to their business for most not to provide it.”
Enhanced services are not included in the national contract; they are
to be negotiated locally with PCTs. Service specifications for enhanced
services will be published later this year and national benchmark prices
will be agreed. However, there is no new or ring-fenced money for enhanced
services. It has to come from PCTs’ budgets.
How and when the new contract will be implemented, provided the
profession accepts it
Implementation of the new contract — providing contractors
vote “yes” — is planned for April 2005. A preparatory
phase will begin in February, and there will be a transitional period
between April and October before PCTs start monitoring pharmacies’ compliance
with the new contract.
Implementation cannot happen without new regulations to be laid.
The PSNC expects that this will happen before Christmas. In addition,
the PSNC has sought amendments to the NHS (Pharmaceutical Services)
Regulations 1992. These are to allow pharmacists to be able to supply
and be paid for a month’s treatment as an emergency supply,
to allow pharmacists to be able to decline to make a supply, to allow
rounding of quantities, to have new minimum weekly hours of service
(40 rather than 30 hours per week), and for changes to be made to
out-of-hours requirements. The PSNC would prefer contractors to agree
out-of-hours service provision with their local PCT and only if a
voluntary agreement cannot be reached should the PCT be able to direct
pharmacies to open. It also wants a requirement for adequate funding
for this.
A concern which the PSNC is expecting pharmacists to raise is over
the pace at which change is happening: roadshows start this weekend,
followed by the ballot and implementation planned for early next
year. “We know the contract framework is right. We are satisfied
that we have got the best possible deal for pharmacists,” says
Mrs Sharpe. “We think it is important for us to move now.”
The contract still has to pass the vital test of the contractors’ ballot.
The PSNC hopes that pharmacists will vote “yes” for two
reasons. Mr Andrews explains: “Not only is this contract going
to give immense professional satisfaction but also financial security.” Mrs
Sharpe believes that the alternative to a “yes” vote,
which is to vote for a system that provides less funding and no security
in terms of profits on drug purchasing, is “a bit of a no-brainer”.
A “no” vote could lead to the Government imposing some
changes to pharmacy’s current contract. Perhaps more worryingly,
it could lead to pharmacists losing the current window of opportunity.
Mr Andrews says that there is a need for improved primary care services. “If
pharmacists won’t deliver, the Government will look for someone
who will and there won’t be a shortage of people who will want
to take this on,” he says. He adds that some pharmacists are,
naturally, nervous of change. “But if they vote ‘no’,
they will be doing themselves and pharmacists a degree of disservice.”
The speed of introduction of some parts of the new contract will
depend on PCTs. This is particularly the case for repeat dispensing
and ETP. Although a paper-based system of repeat dispensing could
be introduced, some PCTs might choose to wait until ETP is in place
and this could cause delays. However, Mrs Sharpe is optimistic. “I
would be surprised if repeat dispensing is not in all PCTs by the
end of the first full year of the contract. There is a tremendous
demand for it.” And ETP should not be far behind: the PSNC
thinks it will be in place in most pharmacies by the beginning of
the second year of the new contract.
In the long term, the role of PCTs will be to monitor contractors’ compliance
with the new national contract and to commission provision of enhanced
services. Monitoring will not begin until October 2005 and contractors
will be given a two-month notice period of any non-compliance before
action is taken. Initially, PCTs have another role and that is to
carry out a pharmaceutical needs assessment. Making PCTs aware of
the new contract and persuading them of the advantages it offers
will, in some places, be a challenge for pharmacy. |
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The
Pharmaceutical Journal