Photo of John Hemming

John Hemming (Birmingham, Yardley, Liberal Democrat)

To ask the Secretary of State for Health

(1) what estimate she has made of the funds received by pharmacies as a result of the difference between the price paid for drugs by (a) the Prescription Pricing Authority and (b) pharmacists in each financial year since 2000–01; and what estimate she has made of the funds received in (i)2005–06 and (ii) 2006–07;

(2) which 10 drugs contributed most to the total funding of pharmacies because of the difference between the price paid by the pharmacies and the price paid by the Prescription Pricing Authority (PPA) in each year since 2000–01; what estimate she has made of the total funding from that source in the next two financial years; and what the price paid was by (a) the pharmacy and (b) the PPA for each of those 10 drugs.

Photo of Jane Kennedy

Jane Kennedy (Minister of State (Quality and Patient Safety), Department of Health; Liverpool, Wavertree, Labour)

There was a survey to measure the margin on drugs available to community pharmaceutical contractors (the discount inquiry) in October 2000. The discount inquiry asked a random sample of pharmacy contractors what prices they had paid for a sample of medicines including rebates from suppliers. As a result of this survey, the claw-back used to calculate reimbursement prices paid to pharmacists was increased by about 0.6 per cent., depending on size of pharmacy, from an average of about 10.6 per cent. to 11.2 per cent. Under the terms of its agreement between the Department and the pharmaceutical services negotiating committee, the data used in the discount inquiry remain confidential.

Although there have been no discount inquiries since 2000, the Department has monitored drug prices using market information from manufacturers and wholesalers. As a result of this, and following a public consultation paper, the Department reduced the reimbursement prices of four recently out of patent medicines on two occasions: the first with effect from December 2003 and the second with effect from September 2004. In total, this reduced the retained margins available to community pharmacy contractors by £300 million per annum.

When the current community pharmacy contractual framework was implemented in April 2005, the amount of retained margins in England was assessed as £500 million per year. This money is an integral part of the total of £1,766 million agreed during the contract negotiations, and will help to pay for services to patients. The Department is currently undertaking surveys of community pharmacy contractor invoices to determine the current amount of retained margin available to pharmacy contractors. If the current survey shows that total retained margins differ substantially from £500 million, the Department will make adjustments by varying reimbursement prices or the claw-back to bring it in line with the sum agreed as part of the contractual framework. The Department will continue to assess the level of retained margin but does not believe it is realistic to prepare forecasts as the actual sums retained will be determined by the market prices for generic medicines which can change significantly over time.

From a survey in October 2005, the 10 drug presentations that contributed most to the total funding of pharmacies due to the difference between the price paid by the pharmacies and the price paid by the Prescription Pricing Authority (PPA) were as in the following table.

Drug presentation PPA reimbursement price,

October 2005

Simvastatin tablets 40mg, pack size 28 4.14
Simvastatin tablets 20mg, pack size 28 1.79
Omeprazole capsules enteric coated 20mg, pack size 28 10.59
Amlodipine tablets 5mg, pack size 28 5.48
Citalopram Hydrobromide tablets 20mg, pack size 28 2.59
Amlodipine tablets l0mg, pack size 28 7.96
Pravastatin Sodium tablets 40mg, pack size 28 3.33
Ramipril capsules l0mg, pack size 28 2.78
Gabapentin capsules 300mg, pack size 100 53.26
Ramipril capsules 5mg, pack size 28 2.55

When assessing the prices paid by the PPA, it is important to note that there is a claw-back such that the reimbursement to pharmacies is reduced currently by 6 per cent. to 12.5 per cent., depending on the size of the pharmacy; this reduction is not allowed for in the table.

Disclosure of prices paid by pharmacy contractors for the purchase of these medicines might prejudice co-operation in future and make it impossible to undertake these surveys, and hence make the monitoring of total payments under the pharmacy contract very difficult.

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