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How much can we afford to charge for prescriptions?

Following controversial government plans for pharmacists to police free prescriptions, C+D analyses three different options for prescription charges and their impact on NHS finances

The ethical debate around charging for prescriptions in England has been a long-running affair. In a case of patient welfare versus balancing the NHS books, it seems unlikely there will ever be a consensus on the right way forward. This month’s news that pharmacists will have to police those who are claiming free prescriptions from 2018 has raised fresh questions over the current system, under which less than 10 per cent pay for their medicines.

Over the years, campaigners have continually proposed alternatives, from creating a universal £2.50 prescription charge, to abolishing the charge altogether as Scotland, Wales and Northern Ireland have done. So which path would you take if you were in charge? Select which option you would prefer by clicking on the buttons below to see how your decision would impact on NHS finances.

 

 

Scenario one: Keep the current charge

Income generated: £895,671,902

The argument for keeping the current system is well-known. Only 10 per cent of prescriptions are paid for and the income generated from these is vital to the NHS, the government says. It also believes the remaining 90 per cent of prescriptions should be free for patients exempted from the charge due to their age, continuing disability, medical condition, pregnancy or inpatient status.

But opponents have criticised the often confusing exemption criteria – patients with underactive thyroid are exempted but this does not extend to those with an overactive thyroid gland, for example – and the administrative burden the system carries.

So how much does this charge really benefit the NHS? The income generated works out at less than £1 per prescription item, if you take 2013 as an example. That year, more than 1 billion prescription items were dispensed in the community, of which more than 90 per cent were free, according to the Health and Social Care Information Centre (HSCIC). There is no up-to-date data on how many prescription items were paid for under the single charge, which was £7.85 at the time. But if proportions have remained the same since 2007, when the last data was collected, they accounted for 7 per cent of all prescription items. This would have generated £566,039,950 in income.

Again using 2007 statistics, we can assume 4 per cent of prescription items would have been paid for using a pre-payment certificate. If all 41,204,000 of these prescriptions came under an annual pre-payment certificate, which needs a minimum of 13 items to make it worthwhile, we can estimate that 3,169,538 certificates were bought. At a cost of £104 each, this would generate an income of £566,039,950. This would make the total income generated by the system £895,671,902 in 2013.

Of course, there are costs attached. The exact figure is not known because the NHS does not hold figures on this, but independent charity The King’s Fund estimates that the charge raised £450 million overall in 2012-13. This figure is only set to rise with the increase in the charge to £8.05 in April 2014 – potentially bringing in an extra £14m if volumes and the administration cost remain static.

 

Scenario two: Introduce a universal £2.50 charge

Income generated: £1.5 billion

Charging everyone £2.50 for a prescription item would iron out inconsistencies in payment exemptions and raise extra funds for the NHS, The King’s Fund proposed in September. There is no doubt the new system would work from a monetary perspective. If the 1 billion prescription items dispensed in 2013 were charged at £2.50 each, this would raise more than £2.5 billion. It would also cut the administration costs of sorting through paid-for and free prescriptions.

In reality, though, the figure would be lower. The King’s Fund accepts there would have to be a form of discount for patients on a high number of prescriptions – whether a pre-payment certificate or another form of cap – that would bring down the total figure. But it still believes the system would generate £1.5bn in income for the NHS.

Reaction to the proposals has been mixed. While the universal charge received support from many C+D readers, the Royal Pharmaceutical Society said they “merely extended the tax on health to everyone” and “heaped unfairness on top of illness”.

 

Scenario three: Scrap the charges altogether

Income generated: None, but potential savings made

England is the only part of the UK where a prescription charge remains, so should it follow Scotland, Wales and Northern Ireland in scrapping the charge altogether? Of course, it would mean losing nearly £900m in income – a sum that is difficult to ignore at a time when the NHS is struggling to make ends meet.

But campaigners argue that it could also generate savings. The Prescription Charges Coalition highlights that an estimated £500m is wasted every year due to ineffective use of medicines. And the prescription charge is only making matters worse, suggested its survey of more than 3,700 people in March 2013. More than a third of respondents said they had not collected at least one prescription item due to the cost over the past year, with three-quarters of this group reporting their health worsening as a result.

Arguably, the reduced administration involved in prescription payments could also free up pharmacists to spend more time helping patients adhere to their medicines.

There are fears that making prescriptions free would dramatically increase the number of items dispensed on the NHS. Looking at other UK countries, though, suggests these fears are unfounded. The number of prescription items dispensed in Scotland grew by 3.1 per cent between 2010 and 2011, when it abolished the prescription charge. This is little higher than the 3 per cent increase between 2009 and 2010.

But, on balance, scrapping the charge is still likely to hit NHS finances. While it may improve the health of patients who pay for their prescriptions, any savings are unlikely to fill the nine-figure black hole. Considering that the NHS spent an average of £160.18 per head on prescriptions in 2013, it’s easy to see why it feels the need to recoup some of this cost.

In today’s penny-pinching climate, are the societal benefits of universally free prescriptions enough to convince policy-makers?

Which option do you support? Tweet @CandDEmma using hashtag #prescriptioncharge

9 Comments

Dave Downham, Manager

Touched on above, but worth re-iterating - the headline figures of scenarios 1 & 2 of £0.9bn and £1.5bn take no account of the costs of collection, not only monetary but time, administrivia and general distraction. To paraphrase, revenue is vanity, but net income after costs is sanity.

Peter Yeoh, Community pharmacist

Why should pharmacist bear the burden of collecting Tax? Would it be better patients pay £2.50 to see a doctor and the prescription is free for All? That way, may cut out unnecessary Gp appointment as well.

Uma Patel, Community pharmacist

Prescription charges is a can of worms. Every new government has promised to reform it and then left it alone. There are no votes in reform unless the charges are abolished which is unlikely in the current financial climate. I am afraid we are lumbered with it.

Christopher Plail, Community pharmacist

Wait until you are a pensioner on a low fixed income needing multiple items and see then if you would advocate charging pensioners for prescriptions. I think anyone in those circumstances would very quickly want free scripts for pensioners to continue.

Soheb Ganchi, Locum pharmacist

Everyone should be issued a card with their exemption that should be presented when picking up prescriptions. No card - no prescription

Paul Dishman, Pharmaceutical Adviser

I think we're stuck with the current situation. The DoH have us collecting money for them and we pay for the privilege of doing so. Our banking costs are ignored as far as the NHS is concerned, so patients paying by debit or credit card cost us around 25p a time. PSNC, as usual, have done nothing to help

Patricia Westhead, Dispenser Manager/ Dispensing Assistant

if prescribers were to stop issuing prescriptions for things easily bought otc for example paracetamol surely that would cut back on the nhs bill

John Schofield, Locum pharmacist

Problem with this is that paracetamol can only be bought in 32s and this is a useless quantity for those in chronic pain eg arthritis. I've thought long and hard and concluded the only fair way is to make all Rx free, and find money another way. The system is doubly unfair because those paying the Rx charges are also usually those paying the most income tax and VAT, ie the working population. It would be possible to adjust exemptions, make the pre-payment charge easier to access eg pay pharmacies the credit charge incurred in buying an exemption, although I've often recommended patients to go to their car, phone up and pay on their credit card and sign the exemption on collection. A standard charge of £1 or 2 per item, with fewer exemptions, but again I'm a pensioner with 9 items on repeat and I would require either a prepayment of say £5 a month max and an increase in my pension of £1 a week to agree to that. A rarely mentioned group who the current arrangements are very unfair to are the uncreditworthy low income group who cannot get a credit card, so have to pay the full whack for their Rx. The only way it can be fairly dealt with is a high level commission representing government, patients groups, pharmacists doctors and other health professionals, to sit and try to find a FAIR, workable, politically acceptable and easy to administer policy. My simplistic answer: Either cut the gold-plated pensions of senior civil servants,politicians and other highly paid public employees to pay for it; and/ or tax freehold purchases by foreign nationals and a mansion tax to pay for free prescriptions, and other NHS benefits.Or if you don't want to do this just make the whole lot free and use general taxation to fill the gap.

Stephen Eggleston, Community pharmacist

What would be the increase in income tax required to compensate for the loss of prescription tax income? If it is 1p in the pound, I do not think many people would object to that if it meant all prescriptions were free. It would benefit pharmacy greatly by not losing money on uncollected prescription charges (HRT being the biggest minefield) and time in not having to sort scripts. However, if all prescriptions are free, what additional burden would that put on prescribers as patients refuse to buy things, opting instead for a prescription because it was free? Currently, many people buy things because they are cheaper than a prescription charge (legal status allowing) and this is better for the pharmacy, for that item, as the cash is in the till and the margin is probably better. Bit of a can of worms this one - need to look out for unexpected consequences

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