The Pharmaceutical Journal
Vol 273 No 7325 p705
13 November 2004

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PSNC warns pharmacy contractors to get their sums right

Pharmacy contractors have been warned by the Pharmaceutical Services Negotiating Committee not to be misled over the level of income they will receive under the proposed new pharmacy contract.

Mike Dent, PSNC head of finance, said: “We are concerned that some contractors may be misled by using the information on funding for the new contract that is currently published [see www.pjonline.com/links/pj] by the North East London local pharmaceutical committee (NEL)” (PJ, 6 November, p678).

Mr Dent said that the NEL income estimation tool contains estimates and errors that might lead contractors to make wrong decisions. There are three areas of concern to Mr Dent.

• An assumption in the model that all non-over-the-counter income is NHS income
• An assumption that NHS income is as profitable as counter business
• An implied invitation to compare current income that includes buying profit to new contract fee income only

The PSNC warns: “It is only by working in detail through the NEL published material that contractors can understand how buying profit should be factored into their calculations. A contractor who is able today to make the level of buying profit implicit within the NEL calculations will be able to secure higher levels of funding under the new contract.”

Hemant Patel, chairman of NEL LPC, struck back saying: “I think that when people work out what their incomes are they will be concerned. That tool has been seen by a number of people who have said that it is not perfect, but that it’s a good indicator. We never claimed that it will be 100 per cent accurate. It will give good figures in the ballpark for 90 to 95 per cent of cases. ”

Responding to the PSNC’s three areas of criticism NEL LPC says that pharmacies have only two income streams — NHS income and non-NHS income. It denies that the tool assumes that NHS income is as profitable as counter business because it states that its accuracy increases as a pharmacy’s proportion of NHS income rises.

It also says that the figures it suggests for comparative purposes are drawn from the Department of Health’s own documents.