Contractors' cashflow 'completely gone' due to drug price changes

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Jay Badenhorst: Drug prices are changing on an hourly basis
Jay Badenhorst: Drug prices are changing on an hourly basis

Contractors are reporting their cashflow is “completely gone” as a result of fluctuating drug prices, the chair of Tees local pharmaceutical committee (LPC) has warned.

Jay Badenhorst – who is also managing director of the 35-branch Whitworth Chemists – told C+D on Monday (November 13) he had identified 221 items where the drug tariff price did not match the price being charged by wholesalers.

“The average drug tariff price for the 221 items we identified is £9.89,” he said. “The average price we are paying is £21.31.”

“It is a joke,” he concluded.

“If you’re not 100% on top of all your prices – checking it on a daily or hourly basis – then basically you’ll get charged without even knowing it,” he warned.

Contractors struggling

Mr Badenhorst said Whitworth Chemists is in the “very fortunate position” of being able to employ a buyer to monitor changes in drug prices. But he is “aware of contractors who come to the LPC because cashflow is completely gone”.

“They are really feeling the pinch,” added Mr Badenhorst, who warned that the 15p-per-item increase in advance payments negotiated by the Pharmaceutical Services Negotiating Committee for November alone “won’t go very far at all”.

“While I welcome it to try and eliminate some of the peaks and troughs of cashflow, it just doesn’t even touch [the problem].”

The 221 items identified by Mr Badenhorst on Monday – and seen by C+D – include all 38 of the items granted concessionary prices by the Department of Health the following day.

Other items on the list included packs of 60 300mg quetiapine tablets – where the wholesaler price was more than £130 above the drug tariff price – and packs of 60 1g levetiracetam tablets – where the price differed by more than £80.

48 Comments
Question: 
How is your pharmacy coping with changing drug prices?

Jonny Johal, Pharmacy Area manager/ Operations Manager

Dear C+D, this piece is seriously unbalanced, not even the BBC would do something like this!

Whitworth Chemists Limited (Company number 03818717), accounts filed in Companies House made up to 31st March 1916 filed in Jan 2017, pretax profit of £1.378 million, gross profit margin improved to 39.2% (vs 2015 34.5%) is saying they have knowledge of other un-named contractors, in the same business as theirs, whose cashflows are 'completely gone'?

"Jay Badenhorsthad identified 221 items where the drug tariff price did not match the price being charged by wholesalers" - you didn't say how many items there are in total in the drug tariff, and the number of items where the wholesale prices are below drug tariff prices, without these numbers, the figure of 221 items are almost meaningless.

Secondly, in the interest of balanced reporting, why was there no mention of those items which wholesale prices are below drug tariff prices, and their numbers?

Thirdly, the article did not specify the wholesalers involved, and therefore we don't know how representative are the prices Jay Badenhurst mentioned were.

In conclusion, just 221 items, in isolation, which the drug tariff price is less than the claimed wholesale price from unnown suppliers caused un-named contractors' cashflow to be 'completely gone'? I think contractors whinge when the tariff price for a drug is low, but they keep quiet when the tariff price is the other way round ... any contractors out there care to do a balanced survey on these numbers?

Charles Whitfield Bott, Pharmacist Director

You realy do not understand the drug tariff or how it works?

Let me inform you how it should work. The DoH sets the cost of a generic drug, pharmacies force down the price to make the profit needed to pay their staff. Then the DoH drops the price in respose to the market price. This is how we have such low drug costs. For the system to work we NEED to buy at a cost lower then the DT, it all goes to pot if there are 221 items above the DT cost.

 

Further more the price quoted for a drug in the DT is NOT what you get paid for that drug, and if you dont know why that is then go and read the DT rather than wasting your time with the politics of envy and worring about other companies GP or NP.

 

If the ship goes down every one goes down including the rats

Jonny Johal, Pharmacy Area manager/ Operations Manager

... and I haven’t even mentioned the claims for uncollected medicines that are re-dispensed, broken bulk claims etc etc... there are clawbacks because the item cost is supposed to be a reimbursement, not an instrument for profiteering through creative purchasing. 

Syd Bashford, Community pharmacist

Whoever assigned you as a pharmacy area manager should seriously look at your credentials!! You clearly have NO clue regarding pharmacy income!!

Charles Whitfield Bott, Pharmacist Director

Uncollected meds are supposed to be re-dispensed, the original script is marked ND and payment not claimed, even though the work has been done at a greater cost than if the item had been collected.

Items that are BB have to be paid for so you make no profit on them, BB just stops you making a loss, remember you can not claim BB on every split pack that you are going to get left with. The only time you may make some extra on BB is if you despense the first part of the pack, claim BB and then despense the second 6 months later, when you can claim BB again, any claims with 6 months from the original do not get paid any ingredient cost.

You dont understand the clawback either, purchase profit is alowed, but its capped, and the clawback is to enforce the cap.

If you realy are an area manager then its alarming that you dont understand how the payment system works.

Ilove Pharmacy, Non Pharmacist Branch Manager

Let the ship go down. The swimmer will survive. It's that simple. If it was so imprtant the government would have perked up by now. Instead they couldn't give a hoot. There are much more important things going on so instead of calling your fellow pharmacists rats just wind your neck in and relax.

Dave Downham, Manager

Dear Jonny, this comment is seriously full of rubbish, not even RT would do something like this!

I can't be bothered dismantling your interjection paragraph by paragraph, but will point out that the accounts you refer to were up to 31 March 1916 <sic>. Even if you meant March 2016, I'm not sure you're aware, but I think there have been 1 or 2 changes to the contract since then.

Chandra Nathwani, Community pharmacist

And any overpayment you refer to does get clawed back, as it is being done now. The profits of an isolated year means are not set in stone and may get clawed back if overpayment is identified. Equally any underpayment (221 items and more) will get re-imbursed in a few years time, but by them the pahramcy may well have gone to the wall due to cash flow problems.

 

 

Ilove Pharmacy, Non Pharmacist Branch Manager

So within 12 months give or take the business will go to the wall because of these changes? lol. Pull the other one my friend.

Intrepid Apothecary, Community pharmacist

No doubt employers will use this as an excuse to refuse even cost-of-living pay increases for pharmacists.

I am aware of at least 1 group where everyone but hte pharmacists get a bonus. Most other groups (excluding pharmacists) got a pay increase. Yet, the legal entity, without which their business cannot operate is the pharmacists.

I think is is thime for pharmacists to unite, enough is enough and we need to make a stand. Anyone agree with this?

Maybe a series of days of action is called for!

Jonny Johal, Pharmacy Area manager/ Operations Manager

 I will support a strike for more pay for pharmacists. 

Dinesh Giri, Purchasing/Procurement

I think DH should really look into it because it is causing a serious problem to community pharmacy...

Ilove Pharmacy, Non Pharmacist Branch Manager

I think they have more serious issues to deal with.

NIRMAL BAJARIA, Superintendent Pharmacist

Whatever happened to the “urgent talks” PSNC was having with the DH few weeks ago. All words and no action. Barry Pharmacist is so right in saying it’s disintegrating in front of us.

Overworked Pharmacist, Community pharmacist

‘Urgent Talks’ were probably forgotten about after the first tea break, and quickly moved on to the topic of when they’ll release the money they’ve clawed back from community pharmacy to CCG’s to plug the gap as they employ more community pharmacist’s in surgeries to look through the drug tariff and switch people to branded generics then wonder why they themselves can’t get shifts as locums on the weekend. They’re killing their own profession and they don’t even know it! Once CCG’s learn that these kind of switches can be done by apprentices on £4/hr, then things really get serious....

Sue Per, Locum pharmacist

Do a companies house search, the company reports average nett profit, after tax .healthy 1.2.m per year. For the last ten years.....Time to pay back all the purchase profits!!!.

Clawback harder & faster, till the pips squeak.   

Dave Downham, Manager

...and 74.2% of statistics are made up.

Syd Bashford, Community pharmacist

You are 55.05% corrrct. 

Chris Locum, Locum pharmacist

Have you included the 95% confidence level...

Sue Per, Locum pharmacist

that is after under reporting, and also masking directors emoulments. It is at the expense of the tax payer, and the hardworking employee & locum  pharmacists. The good glory days are over. The taxpayer has been squeezed dry, employees fed up of being exploited, by the gangmasters with lucrative contracts. The system needs to disintegrate, and let a new one evolve!!! Freedom from the slave masters shackels 

Wolverine 001 , Pharmacist Director

Cant wait until the pharmacy number are decimated and your SUPER locum skills are laid to waste 

Ilove Pharmacy, Non Pharmacist Branch Manager

Lol. Empty threats. 

Sue Per, Locum pharmacist

As it is the skills are not valued., The message is loud and clear, Jump ship, reskill, and do something else.

Community Pharmacy is Modern day Slavery,  with the contractors whipping out maximum profit out of the employees and locums

Wolverine 001 , Pharmacist Director

Maximum profit??? Do you know how much profit a single pharmacy makes....? I doubt it and reskill into what business advisor??

John Urwin, Community pharmacist

Did you mean shackles or shekels?

Overworked Pharmacist, Community pharmacist

She could've meant anything to be honest, could even be shillings she's talking about. Keyboard warriors often  have opinions on subjects they know nothing about! However feel the need to shout from the rooftops! I'm suprised Sue's not commented on how 190 Lloyds shops are closing because they made soooooo much money over the last 10 years and are going to hand back it back to the government. By her reckoning its something like this £1.2M x 10 years x 190 brances equals £2.2 BILLION back to the government in excess profits : P

Sue Per, Locum pharmacist

Read carefully, its not profit per branch, but for the group.

Time to land back to Earth.

 

Dave Downham, Manager

So that's £1.2m divided by 35 which is £34,000 per branch. Or £3,000 per month. Hardly excessive. I hope you're better at counting in 28s, Ms Per

Wolverine 001 , Pharmacist Director

not to forget any corporation tax on the profit and the spilt between the directors.... ohh so much profit yet we have to pay locum who cant even seal dosette trays properly 

 

Jonny Johal, Pharmacy Area manager/ Operations Manager

You forgot, the NHS is an organisation which provides treatment for people who are ill. It doesn’t have an obligation to protect pharmacy contractors profits or safeguard their cash flow. The NHS is not a charity for pharmacy contractors. 

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