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REVEALED: Are DH claims of pharmacies 'scamming' the NHS accurate?

The government has vowed to crack down on fraud committed by contractors – but what figures are the accusations of "large-scale" fraud based on?

The Department of Health and Social Care (DH) has declared war on fraud within the NHS in England. Last month, the government announced a crackdown to “make sure every penny of the extra funding we are giving the NHS as part of our long-term plan is properly spent”.

“The message is clear,” health secretary Matt Hancock said. “The NHS is no longer an easy target, and if you try to steal from it you will face the consequences.”

The NHS Counter Fraud Authority (NHSCFA) has identified community pharmacy contractor fraud as one of 13 “thematic areas” – including general practice, dental contractor, and payroll and identity fraud – which it estimates cost the NHS a total of £1.29 billion in 2016-17.

The DH tells C+D the NHSCFA’s latest strategic intelligence assessment sets out its best estimate of NHS fraud. But C+D has learned the DH has based its projections of the amount lost due to pharmacy fraud partly on “loss exercises conducted within the dental and optical contractor area”.

So what is the true scale of contractor fraud in community pharmacy? And how much weight should the sector give to the DH’s claims that “large-scale scams” by a “minority of pharmacists” is “impacting heavily” on the total fraud bill in England?

How many reports of fraud were received?

Through a Freedom of Information request to the NHSCFA, C+D has obtained its most recent estimates of pharmacy fraud. In 2016-17, there were 132 reports of fraud across the 11,700 pharmacies in England – meaning allegations “were received at a ratio of one allegation per 90 community pharmacies”.

This included 97 reports of “inappropriate claims relating to dispensing and enhanced services offered at the premises”, 15 reports of “activities that contravene the terms of the contractual agreement”, and seven reports of “inflation of fees, allowances and reimbursements claimed under the drug tariff”.

How reliable are the figures?

The NHSCFA estimates that pharmacy fraud alone cost the NHS £111 million in 2016-17 – or 1% of the total amount community pharmacy receives from the NHS in England. But it acknowledges that this estimate is only between 25% and 50% accurate and should be “treated with low confidence”.

In its strategic intelligence assessment, the NHSCFA also admits it “has not conducted any loss analysis exercises on pharmaceutical contractors”. However “other exercises” across the public sector have identified an average fraud rate of between 1% and 3.5%. If the higher estimate of 3.5% were to be applied to the amount the NHS pays pharmacy owners, it would produce a value of approximately £388.5m, it says.

“As those areas are not truly comparable,” it explains, “the NHSCFA took the position of 1%.” When C+D approached the organisation for further clarification, a spokesperson said: “That doesn't mean that the NHSCFA receives allegations against approximately 1% of the community pharmacy contractor network, as there might be more than one allegation against any pharmacy.”

Has the DH found any other evidence of pharmacy fraud?

When taking into account the “approximate expenditure” within the sector, community pharmacy contractor fraud is “underreported”, the NHSCFA report claims.

The one example the DH gave to back up its claims of “large-scale scams” occurring in the sector is a pharmacist in north London, who was handed a 12-month prison sentence and a £45,000 fine after “abusing the prescriptions system, including repeat prescriptions”. However, the DH has confirmed to C+D that this case relates to a sentence handed down in 2009, for acts committed between 2005 and 2006.

When asked by C+D whether it has any additional evidence of pharmacy owners fraudulently claiming payments, the DH declined to comment further.

So there you have it. The DH is set to embark on a crackdown on “scams” when it can't provide compelling evidence fraud is occurring at a large scale in the sector – and risks damaging the reputation of community pharmacy, and losing the goodwill of the sector, in the process.

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