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Legal view: What happens if I refuse to dispense at a loss?

From Exeter to Elgin, Ebbw Vale to Enniskillen, pharmacists are all asking the same questions: do I have to dispense at a loss and what can happen to me if I refuse to?

With reported stock shortages and wholesale price increases for some commonly prescribed antibiotics headline news, many pharmacists may be forgiven for asking themselves whether they are obliged to supply medicines to patients, even where they would be making a loss in doing so.

The answer lies buried in NHS legislation but may not be music to pharmacists’ ears.

Read more: DH issues five further serious shortage protocols for penicillin

All four home nations operate a market entry regime for the provision of NHS pharmaceutical services with rules that restrict entry into the market to those who can satisfy the relevant regulatory test – which is different in each home nation.

Where a person has satisfied the relevant regulatory test, they will be included in the pharmaceutical list of the relevant health authority.

Inclusion in a pharmaceutical list is commonly known as having an NHS “contract”, but there is no contract as such.

Instead, inclusion in the pharmaceutical list brings with it various rights and obligations. These rights and obligations are set out in regulations and can be detailed and complex.

Read more: Not fair: Public backs calls for increased pharmacy funding as pressures intensify

However, for the purposes of considering the supply of medicines, the regulations set out terms of service, which dictate what an NHS pharmacist may or must do when they are presented with a valid NHS prescription.


Terms of Service

 

While the terms of service vary between each home nation, they include an obligation that an NHS pharmacist must provide prescribed medication to a person presenting a prescription “with reasonable promptness”.

There are circumstances where the NHS pharmacist may refuse to make a supply – for example, if there is an error on the prescription, the person presenting the prescription threatens the pharmacy staff with violence, or where it would be clinically inappropriate to make the supply.

However, these circumstances do not include where the pharmacist would not be fully remunerated for the supply.

Read more: Dispensing at a loss is absurd – enough is enough

Provided the NHS pharmacist complies with the relevant terms of service, they are entitled to be paid for that service in line with an agreed remuneration structure. This is largely set out in a Drug Tariff.

In relation to the provision of medicines, this remuneration structure comprises of a professional fee for dispensing the medicine and a reimbursement fee for the cost of the medicine supplied together with some associated additional payments as appropriate.

 

The Drug Tariff

 

In relation to the reimbursement fee, the Drug Tariff includes a price list for more commonly prescribed items – including, for example, amoxicillin oral suspension and capsules.

Other items are priced according to a manufacturer or supplier price list.

The Drug Tariff is published every month and is, therefore, to a certain extent inflexible. For example, if the price of a medicine increases during the month, this could not be reflected in that month’s Drug Tariff.

Read more: NHSE&I reviewing pharmacy’s policy on avoiding dispensing at a loss

For that reason, the relevant government department – the Department of Health and Social Care in England – can agree a concessionary price during the affected month, which would set an increased reimbursement price for that drug for the relevant period.

There were over 150 price concessions listed on the Pharmaceutical Services Negotiation Committee's website for England for November 2022.

The system of price concessions has the benefit of enabling flexibility to deal with short-term price increases. However, price concessions may not be agreed until part way through the relevant month – sometimes, even, not until the very end of the month.

This means that NHS pharmacists who supply medicines in December may not know the actual reimbursement price that would be paid for those medicines until the end of the month.

 

Penalties for pharmacists who fail to fulfil obligations

 

An NHS pharmacist who fails to supply prescribed medicines with “reasonable promptness” is likely to be in breach of their terms of service obligations. The consequences of a breach of the terms of service vary for each of the home nations.

For example, in England and Wales, the relevant health authority may issue a “breach notice” requiring the NHS pharmacist not to repeat the breach.

It may also withhold remuneration that is proportionate to the breach.

Repeated breaches can give rise to a risk that the NHS pharmacist would be removed from the pharmaceutical list altogether, essentially closing the pharmacy down. However, this power is rarely used.

Read more: DH to bring in new ‘fairer’ discount scale to reduce dispensing at a loss

Pharmacists also have ethical obligations to their patients through the General Pharmaceutical Council's (GPhC) standards – or their equivalent in Northern Ireland through the Pharmaceutical Society of Northern Ireland.

In Great Britain, those standards include a requirement to, for example, “make the care of the person their first concern and act in their best interests” and to “consider and manage appropriately any personal and organisational goals, incentives or targets and make sure the care they provide reflects the needs of the person”.

Where a pharmacist fails to meet the standards, the GPhC may undertake a fitness-to-practise investigation.

In my experience, investigations relating to an allegation that a pharmacist has refused to provide a prescribed medication are rare, but not unheard of.

In conclusion, NHS pharmacists do not have a discretion to refuse to supply NHS medicines where doing so would cause them financial loss. Pharmacists who refuse to supply may face enforcement proceedings by the relevant health authority and could even become subject to a fitness-to-practise investigation.

When prices for medicines spike, NHS pharmacy owners may therefore feel that they are stuck between a rock and a hard place whilst keeping their fingers crossed for a price concession to be agreed.

 

Noel Wardle is a partner at Temple Bright LLP and specialises in pharmacy law

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