The NHS Business Services Authority has given advance notice to contractors in England of two changes to the way Drug Tariff prices will be managed. Both changes come into effect from next month.

From 1 April the way that Category A reimbursement prices are set will change, with prices ‘transitioning” over the next six quarters from the existing to the new arrangements.

Under the ‘new arrangements’, reimbursement prices will be set using information from suppliers obtained under the Health Service Products (Provision and Disclosure of Information) Regulations 2018. All available pack sizes of licensed generic medicines will be considered.

Under the ‘old arrangements’ the reimbursement prices will be set as the weighted average of the list prices of the following suppliers: AAH Pharmaceuticals, Alliance Healthcare, Teva UK and Accord-UK on or before the 8th of the month, two months before the first month of the quarter being reimbursed.

The changes form part of a series of drug reimbursement reforms proposed by DHSC following a public consultation back in 2019. The Department of Health’s decision is primarily focussed on equalising access to margin on Category A medicines, says Community Pharmacy England,

CPE adds that it did not support introducing the changes at this time because of the wider challenges pharmacies are currently facing, and because of the unknown impact they could have on the already turbulent medicines supply chain.

“Prices of medicines in Category A are currently subject to monthly adjustment. Moving to price updates every two months could increase price volatility and the need for price concessions,” says CPE.

“We encourage pharmacies to report any problems obtaining a Part VIII product at or below the stated Drug Tariff price, using the online feedback form on our website.”

Top-up system for concession prices to be introduced

In a second change, the NHS BSA has announced that a retrospective top-up payment system for price concession lines will be implemented from April. The aim is to address the issue of inappropriately low concession prices by providing automatic top-up payments to pharmacy owners,

The top-up payments will be applied automatically to all pharmacies who have dispensed the affected items. It will be paid on a quarterly basis, for products granted a concession price three quarters before. The time lag is because the system will use data from the margin survey of independent pharmacies, which takes approximately nine months to process, explains Community Pharmacy England.

A new section will be added to the Drug Tariff, Part VIIIE. Items which are eligible for top-up payments will be listed here.

The first retrospective top-up payments will apply from April 2024, to reflect activity during April to September 2023 (meaning the first two quarters of 2023/24 will be covered by a single payment). Payments will appear on pharmacies’ April 2024 Schedule of Payment.

This is part of a package of measures that CPE and the Department of Health have been considering to improve the price concession system.