Secrets of the Scottish drug tariff

Every month the Scottish drug tariff is published for and on behalf of the Primary and Community Care Directorate, Scottish Government. The Drug Tariff contains various information regarding the prescribing, dispensing and reimbursement of medicines and appliances on NHS primary care prescriptions in Scotland.

For a dispensing contractor, the most important part of the Scottish drug tariff is part 7 which contains the starting point reimbursement price of most medicines which are dispensed in Scotland. Each medicine is listed by its generic name, form, strength and quantity and Drug Tariff reimbursement price in pennies.

[Why it is still calculated in pennies rather than £ is beyond me, but then again why is the English Drug Tariff sections still listed in Roman Numerals, I mean who uses Roman Numerals in their day-to-day mathematics? Any answers to either of those questions please email me here please.]

The Scottish Drug tariff is published monthly here.

I mentioned that the price published in the Scottish Drug Tariff is the starting point reimbursement price, which is because that price published is not the actual amount of money a dispensing contractor will receive per pack of medicine dispensed against an NHS prescription in Primary Care.

So why isn’t this the actual reimbursement price?

Due to a complicated set of calculations, the Scottish Government takes back some of the Drug Tariff prices as there is an assumption that the contractor can buy some medicines at a discount. The calculations allow for Scottish community pharmacy contractors to gain an agreed level of profit from its dispensing activities and so the ‘clawback’ is calculated and taken back from the reimbursement.

Generic medicines by their very nature fluctuate in price all the time as they are a market commodity, medicines in short supply tend to rise in purchase price, whilst those in abundant supply tend to fall in purchase price. This all makes for a complicated situation and is difficult for a Scottish dispensing contractor to keep on top of things and ensure they are not dispensing at a loss.

Helpfully, the Scottish Drug tariff shows price changes each month, but as far as I can see there is little to indicate the value of the price changes.

It is possible to download Part 7 as a spreadsheet, and by utilising various tools compile a list of changes. Of course, where the Drug Tariff price is rising this is of less concern to the dispensing contractor than when the price is falling. If the reimbursement price falls below the actual purchase price of a medicine, it will be obviously be dispensed at a loss and it is these price drops which need to be tracked and checked against purchase price.

Whilst there are mechanisms in place for Scottish Drug tariff prices to be amended to take this into account, it is still worth making sure that as a dispensing contractor, you are purchasing at the best possible price to ensure your dispensing is viable.

The table below shows the ten largest price drops for January 2021 Scottish Drug Tariff Part 7 generics:

For these medicines it is essential that the dispensing contractor checks the purchase price they are paying and keeps an eye on the adjusted reimbursement prices which are published and updated by Community Pharmacy Scotland here.

Note it would be helpful if Community Pharmacy Scotland added the VMPP ID to their list of adjusted prices which could then be used to track the adjusted prices more easily.

The full list of January Drug Tariff changes can be viewed below.

Please note this list does not contain those items where the price change, either way, is less than 20p – if a full list would be helpful please let us know and we can upload a full list.

In conclusion, it cannot be easy for a Scottish dispensing contractor to keep up with these changes, as the purchase price of generics can change daily.

I believe that there are various buying groups such as Avicenna and Cambrian who can offer services to help ensure that retail pharmacies are not dispensing at a loss. And the dispensing doctor buying groups such as PSUK and Forte should be able to help in this area as well. The major multiples must surely have their own systems in place, but for smaller independent pharmacies my advice is to find out a system that works for you to ensure you are not dispensing at a loss.

It would also be helpful if Scottish dispensing contractor dispensing systems showed current real-time Drug Tariff price less the appropriate clawback when an item is being dispensed.

This article was written by Greg Bull founder of the Dispensing Doctor Experts. You can contact Greg by clicking here.

If you have an opinion and would like to share it with the PIP audience we welcome letters to the editor.