Drug reimbursement reforms could increase price volatility, warns negotiator

Changes to the way drug reimbursement prices are set “could increase price volatility and the need for price concessions”, Community Pharmacy England (CPE) has warned.

Its comments came in response to reforms to the setting of drug tariff Category A reimbursement prices from 1 April 2024, published on the NHS Business Services Authority website.

Currently, the reimbursement prices of medicines in Category A are subject to monthly adjustment but, under the changes, they will be updated quarterly, based on sales and volume data obtained by the Department of Health and Social Care (DHSC) under the Health Service Products (Provision and Disclosure of Information) Regulations 2018.

The transition will take place gradually over six financial quarters, concluding in July 2025, when the reimbursement prices will be set solely using the new method.

The changes are part of a series of drug reimbursement reforms being introduced by DHSC, which it says will ensure that pharmacy contractors receive equitable access to the medicines margin, following a public consultation in 2019.

According to its consultation response, published by the DHSC in November 2021, the changes will mean that drug tariff reimbursement prices “reflect actual selling prices (with an element of medicine margin) nearer to the time of the contractor paying their supplier”.

It also said that the new system “would not be so dependent on the retrospective medicine margin survey to find the retained medicine margin or adjust reimbursement prices as needed to deliver the agreed amount of margin, and hence be better for contractors’ cash flow”. 

However, in a statement on its website, published on 8 March 2024, CPE said that it does not support the changes at this time “because of the wider challenges pharmacies are currently grappling with and the unknown impact that these changes could have on the already turbulent medicines supply chain”.

It added: “Moving to less frequent price updates for Category A medicines could increase price volatility and the need for price concessions.”

Mike Dent, director of pharmacy funding at CPE, said: “Now is not the time to be tampering with established price-setting processes and, as such, CPE has not accepted these changes going ahead.

“Community pharmacies are weighed down by long-standing funding pressures and already struggling to keep up with the large number of medicines supply issues: there is little to be gained and much to lose when we can’t predict how the market may react to these changes.”

Commenting on the reforms, a spokesperson for the British Generic Manufacturers Association told The Pharmaceutical Journal: “We welcome these changes as our position has always been that reimbursement prices should always be as reflective of manufacturers’ actual selling price as possible.

“The DHSC is in receipt of quarterly sales and volumes information from all manufacturers and wholesalers, so it makes sense that reimbursement prices should be informed by a wider range of available data.”

The government consultation in 2019 also proposed adjusting Category M drug reimbursement prices, so that community pharmacies would recoup less money on generics for which a branded version exists and more money from other Category M drugs.

The DHSC was contacted for comment.