Why am I not making enough margin? Understanding margin delivery
Key points from this webinar:
|1. Drug Tariff prices are only ever indicative – The price change mechanism for generics means that any price changes up to the 8th of the month take effect in that month. Category A pricing is based on a weighted average that can only be set at the end of the dispensing month. Category C prices are based on a reference product which used to be the originator brand but now there can be multiple branded generic equivalents available.
|Action – Know what you are getting paid – allocate a dedicated staff member to monitor fluctuations in pricing and what you pay for Cat A/C lines.
|2. The following factors affect the amount of margin you can earn; your individual dispensing mix (amount of brands vs generics you dispense) and local prescribing policies including branded generic prescribing, increasing the period of treatment and trying to beat the Category C reference product price by prescribing a cheaper (and usually difficult to source) brand. But none of these actually reduce costs to the NHS.
|Action – Work with local teams to find alternative cost and time saving solutions e.g. Electronic Repeat Dispensing.
|3. Branded generic prescribing undermines community pharmacy funding by affecting the amount of buying margin earned by pharmacies. This margin is given as an incentive to drive down drug prices to NHS overall and if it is not earned within the year, all category M generic prices are uplifted as a result, meaning that all CCGs are penalised.
|Action – There is a lack of understanding of how community pharmacy funding works. Signpost local practices, PCNs and medicines management teams to this funding webinar series to help improve understanding.
** More resources will be made available soon. **
What to do next:
- Engage with local practices, PCNs and medicines management teams on dangers of undermining community pharmacy funding
- Signpost them to this funding webinar series to help improve understanding
- Work with them to find alternative cost and time saving solutions e.g. Electronic Repeat Dispensing
- Allocate dedicated staff member to monitor fluctuations in pricing (particularly Cat A products and what Cat C products you are dispensing vs Tariff)