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Wholesaler: Contractors risk losing out in transition to new discount scale

Community pharmacy owners could face bigger losses during the transition period to the new discount deduction system and following its full implementation, the co-founder of wholesaler Sigma Pharmaceuticals has warned.

The Pharmaceutical Services Negotiating Committee (PSNC) announced last month that a new discount deduction system will gradually be introduced from later this year as part of a series of drug reimbursement reforms agreed by the negotiator and the government.

Sigma co-founder Bharat Shah believes that pharmacies will generally lose less money on branded medicines once the new scheme is fully implemented.

However, they might lose out when dispensing generics, he told C+D in an exclusive interview earlier this month (September 2).

He fears that pharmacy contractors could experience losses during the transition period leading to the implementation of the new scheme – which will begin in October and is expected to be fully established from January 2024.

PSNC director of pharmacy funding Mike Dent told C+D that the changes will result in a “varied” impact on individual contractors “as the core factor in the new system is dispensing mix”.

“The discount deduction changes aim to help correct a system that has been unfair for a long time, and they were given very careful consideration by all of the contractors on PSNC,” he said.

PSNC has recently developed a tool to help contractors estimate the impact the new deduction scheme is likely to have on their payments.

“The new PSNC calculator provides a useful tool to help contractors do the sums to better help them estimate how they will be affected,” Mr Dent added. 


“Very complicated formula”

The new deduction groups

Rather than continuing to be based on “one set value” for all items dispensed, the new discount deduction system will see the introduction of three deduction groups:

Appliances, meaning products listed in Part IX of the Drug Tariff, will be deducted at 9.85% Generic medicines, meaning category A and M products in Part VIIIA of the Drug tariff, will be deducted at 17.52% Branded medicines will be deducted at 5%.

During the transition period, the monthly discount deduction will be calculated based on the old and new rates concurrently.

“The total discount will be the weighted total of those two discount calculations added together,” PSNC wrote in a factsheet on the new deduction scheme.

However, Mr Shah believes that this is not only “a very complicated formula”, but that it would also have been more sensible to start the new deduction scheme after the old scheme had concluded.

But Mr Dent explained that to “protect” pharmacies that benefitted from the previous system, “the changes are being phased in over a prolonged transition period, in order to give those pharmacies time to adapt to their new circumstances”.

Mr Shah feels that “pharmacists will have to be prepared for taking on huge clawbacks that are going to be coming in the next 18 months” by investing into service provision, he suggested.

However, Mr Dent added that “it is important to note that contractors will continue to only have one monthly deduction, split between the old and new calculation methods, with the weight gradually increasing in favour of the new system”. 


This article was amended on September 14 to edit out Mr Shah's calculations, which are under review


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