Should NHS pharmacy contractors have to dispense medicines at a loss? Can they refuse to dispense if the Drug Tariff reimbursement will be below the price the pharmacy owner has paid for a medicine? I have been asked these questions many times. The traditional lawyer’s answer is: it depends.
By way of background, it is worth bearing in mind that the Drug Tariff in each of the home nations does not aim to provide precise reimbursement of what a contractor has paid for a specific item.
It is expected, however, that over the course of a year, contractors would not have to dispense at a loss. It is also inevitable that some pharmacies will do better out of the reimbursement arrangements and some will do worse, possibly because smaller pharmacies having less buying power than larger pharmacy businesses.
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In terms of the law, the starting point is the NHS terms of service.
These are part of NHS Regulations made by ministers. Throughout the UK, the terms of service say that when a prescription is presented, the contractor must supply the prescribed item with reasonable promptness.
A failure to supply with reasonable promptness would be a breach of the terms of service which could lead to a decision to withhold remuneration.
Simple?
At first sight, there is no room for a decision by a contractor not to supply once a prescription is presented, regardless of the difference between the price paid to a wholesaler compared to the reimbursement price. However, the position may not always be so simple.
In my view, what is meant by “reasonable promptness” and whether the contractor must supply a prescribed item may depend on the answer to two questions:
- Does the contractor have the item in stock?
- What is the difference between the price paid to a contractor and the Drug Tariff reimbursement?
If the contractor has the item in stock and the loss a contractor would make would be relatively small, the contractor should dispense in the usual way unless the volume of prescriptions for the item is so large that the overall loss could not be said to be relatively small.
In that case, the contractor might be justified in delaying dispensing until a concessionary price is in place and the delay may considered reasonable. After all, would it be reasonable to have to supply if the result would be an unaffordable loss of thousands of pounds over the course of a year?
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However, reasonableness will depend on all the circumstances, not just the size of the financial loss: if the contractor has the item in stock and the medication is of a type that the patient would suffer serious harm without the medication, delaying a supply while waiting for a concessionary price is less likely to be regarded as reasonable promptness.
What if the contractor does not have the item in stock and there is a very large difference between the price payable to a wholesaler and the Drug Tariff reimbursement price? It will always be a matter of degree, but the contractor cannot be required to purchase from a wholesaler something the business cannot afford.
The contractor may be entitled decide to wait for a concessionary price and to tell the patient that the pharmacy does not have the product in stock, so there will be a delay before a supply can be made. Again, whether a contractor chooses to do this may depend on an assessment of the patient’s needs and the size of the financial loss.
If a failure to supply with reasonable promptness is alleged, the ICB and its counterparts elsewhere in the UK will have to prove its case. Proving something is not reasonable may not be easy because of all the circumstances that need to be taken into account.
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Separately, there are professional issues that all pharmacy owners and pharmacists will have in mind. It is an essential aspect being a healthcare professional that they will put the interests of patients before their own financial interests.
Friction
Except in an extreme case, it seems unlikely that the GPhC would regard it as misconduct if a decision has been made not to supply a medicine because a financial loss would be made. However, in some cases, pharmacists may consider that it would be unethical to refrain from supplying a prescribed medicine, especially if the item is in stock.
Apart from anything else, the existence of dilemmas like this may well cause friction between pharmacy owners and pharmacists.
It goes without saying that the NHS remuneration system ought not to impose these legal and ethical dilemmas on pharmacy owners. It remains to be seen whether the newly agreed community pharmacy contract framework for England will ease some of the pressures that cause significant differences between some wholesale prices and Drug Tariff reimbursement prices.
David Reissner is Chair of the Pharmacy Law & Ethics Association