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Lloydspharmacy predicts further cat M rise to ‘partially’ aid recovery

McKesson CEO: Our UK retail business experienced industry-wide underfunding by the NHS
McKesson CEO: Our UK retail business experienced industry-wide underfunding by the NHS

Lloydspharmacy’s owner is expecting further category M price increases in England before April 2020, which will help towards “partial recovery” across its European business.

Adjusted operating profit for McKesson’s European pharmaceutical solutions division – which includes Lloydspharmacy and wholesaler AAH – in the three months to September was $43 million (£33.4m), a 19% drop on the same period the previous year, McKesson said in its latest financial report published yesterday (October 30).

The figures are mainly a consequence of the “challenging retail pharmacy environment in the UK”, McKesson explained.

However, it reiterated its prediction that there will be another increase in category M reimbursement prices in England before the end of the fiscal year, which will help towards a financial recovery across its European business.

In a conference call, CEO Brian Tyler said McKesson UK's retail business “experienced industry-wide underfunding by the NHS” in the three months to June.

However, “consistent with our expectations in July, we did see a nominal tariff increase in the month of August”, he added, and the company expects “a further upward tariff revision later this fiscal year”.

This “should result in a partial recovery of the underfunding we’ve experienced year-to-date”, Mr Tyler added.

McKesson chief financial officer Britt Vitalone later reiterated that the company continues “to anticipate improvement in the second half of fiscal 2020” across its European business.

Opioid litigation in the US

McKesson is one of the pharmaceutical companies being accused of profiting from driving up demand for opioids in the US.

According to the US Department of Health and Human Services, the opioid crisis began in the 1990s when pharmaceutical companies assured medical practitioners that patients would not develop an addiction to “opioid pain relievers”, resulting in an increase in the prescribing of these medicines.

This led to a “widespread misuse of both prescription and non-prescription opioids”, which claimed the lives of 47,600 people in 2017 alone, according to the Centers for Disease Control and Prevention, the national public health institute in the US.

Speaking during McKesson’s conference call yesterday, Mr Tyler said that last week McKesson reached “a collective $215m (£166m) settlement with two Ohio counties, Cuyahoga and Summit”, along with two other distributors, in a bid to resolve the opioid crisis and accelerate relief for those impacted by it.

However, McKesson “strongly disputes the allegations” and “is prepared and continues to be prepared to litigate and to vigorously defend the mischaracterisation that our company drove demand for opioids in this country”, he stressed.

Mr Vitalone added: “McKesson recorded $36m (£27.8m) in opioid-related litigation expenses for the three months to September and $72m (£55.6m) year-to-date.”

“We continue to assume opioid-related litigation costs to be approximately $150m (£115.8m) in fiscal 2020.”

13 Comments
Question: 
Has the increase in cat M reimbursement prices impacted your pharmacy's finances?

Lucky Ex-Locum, Superintendent Pharmacist

Frankly, I don't care if Lloyds turn a profit or not. They are a major part of a lot of the problems affecting pharmacy at the moment by putting monetary gain before staff welfare. It seems the parent company is deeply immoral as well but I do wonder how they managed to change the laws of pharmacology and claim that opioids were non-addictive. A visit to any city centre in the world would give the lie to that claim. Was there by any chance money involved in their negotiations with the prescribers or is that me being a world weary cynic again?

Reeyah H, Community pharmacist

Don't like the big boys but good for them! I should have done the same, but hey us little people can't afford to do the same! 

RS Pharmacist, Primary care pharmacist

What is going on here? Whats the game.....

CCG Pharmacist, Primary care pharmacist

My understanding is that they will be paid at the higher price for all the scripts submitted in August which, of course, was due to a 'computer glitch'. A cynic might suggest they have deliberately held back an awful lot of scripts in order to benefit from the higher prices in August vs the lower prices in July

Alexander The Great, Community pharmacist

How do you with hold scripts when the branch submits prescriptions at the end of the day.

N O, Pharmaceutical Adviser

Does it really matter? Lot of Pharmacies do it. Some smaller pharmacies do it to reach the 2500 cut off to get the Establishment payment.

I don't think, whether computer glitch or not, there is no way to legally pin down anyone. Because the Pharmacies are contractors, and get paid 3 months in arrears, so what they claim and when is up to them as long as the scripts are claimed within 6 months.

Alexander The Great, Community pharmacist

What planet are you on.... establishment payments have been abolished.

Reeyah H, Community pharmacist

No. 50% is still there and £800 on top.

CCG Pharmacist, Primary care pharmacist

Wait until you see the figures for August! Reviewing them today it would appear the decrease for July has been more than made up for in August. A coincidence? Apparently a 'computer glitch' is to blame......

CCG Pharmacist, Primary care pharmacist

Lloyds Pharmacy appears to have been rumbled. Huge decrease in script items claimed in July 2019 by it's stores followed by huge and unprecedented increase once the Cat M prices have increased in August 2019.

Tired Manager, Community pharmacist

Is this actually illegal? I don't know the scale of the Lloyds figures but I've never worked in a pharmacy that doesn't try and play around a bit to maximise/minimise items towards the end of the month before a Cat M change. 

MR Dissillutioned, Pharmacy owner/ Proprietor

Reviewing the July prescription item data on the NHSBSA website I noticed that all Lloyds pharmacies in our area had lower than normal prescription numbers !

CCG Pharmacist, Primary care pharmacist

Wait until you see the figures for August! Reviewing them today it would appear the decrease for July has been more than made up for in August. A coincidence? Apparently a 'computer glitch' is to blame......

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