NHS digitisation/electronic prescription services
Electronic health applications have been a feature of the NHS for some time, as a response to improving access to healthcare services, particularly in very remote areas, as well as an infection control measure during the COVID-19 pandemic.

For practice dispensaries, the most relevant technological challenges are presented by online prescription delivery services and electronic prescription services. 

The rising popularity of online pharmacies reflects a general consumer movement to buy products and services online. Over the 10 years, 2009-19, exclusively mail order pharmacies have grown their market share of the pharmacy network in England from 0.5 to 3 per cent (56 to 349 businesses).  In addition, many traditional High Street pharmacy businesses will also operate a mail order service.   

In England, online pharmacies are eligible to dispense prescriptions issued via the Electronic Prescription Service (EPS), an NHS service that digitally transfers prescription orders between GPs and pharmacies.

Dispensing patients are currently unable to use the EPS to order medicines from their practice dispensary due to a gap in the EPS specification. The DDA believes this creates inequalities for patients and for dispensing practices, which are both unable to reap the benefits of electronic prescription transfer. Dispensing patients and practices have also been subject to aggressive marketing by online pharmacies to capture a patient’s EPS prescription.

Non-NHS funded EPS software is available for certain GP dispensary system users. However, the DDA only supports use of a universal system that is NHS funded. A review of the EPS is currently underway, which may facilitate the inclusion of dispensing practices in England within the service.

While digital health strategies exist in Wales and Scotland, these programmes do not extend to electronic prescription transfer between GPs and pharmacies.

For further information

Statistics: Electronic Prescription Service nominations

Electronic Prescription Service: NHS Digital information

Digital Services for Patients and Public: NHS Wales

Digital care for Scotland: Ehealth strategy

Scotland’s Digital Health and Care Strategy: enabling, connecting and empowering: NHS Scotland

Pharmaceutical Needs Assessments
Pharmaceutical Needs Assessments (PNA) were introduced in England in 2015 (and in Wales in 2022). PNAs are the mechanism that allows local health and wellbeing service coordinators to assess the adequacy of their pharmaceutical services provision

PNAs are important documents because they identify the areas in which a dispensing practice can operate (controlled or reserved localities) and provide the benchmark for the application of the NHS Pharmaceutical Services regulations that enable new pharmacies to open.  

Importantly, PNAs in Wales recognise the dispensing GP service as a pharmaceutical service equal to that offered by pharmacies and thus protect the GP dispensing service from predatory pharmacy applications.

In England, however, the GP dispensing service does not receive the same recognition, and thus, if a pharmacy opens in an area served by a GP dispensary, GP dispensing must cease to patients who live within a 1.6km radius of the new pharmacy.

In England, pharmacy applications that offer ‘unforeseen benefits’ in relation to the current local PNA continue to exert downward pressure on the dispensing GP network. In 2019-20, such applications were the most commonly-used in controlled areas where dispensing GPs operate – accounting for eight of the nine pharmacy applications in these areas.

Scotland does not operate a PNA-based pharmaceutical service network. Instead local Pharmacy Practices Committee will decide the necessity or desirability of the proposed new pharmacy, using criteria set out by current NHS Pharmaceutical Services Regulations in Scotland.

Since 2014, Scottish regulations have offered significant protection for the medical services provided by dispensing GP practices. This offers recognition of the vital role that dispensing income plays in supporting otherwise unviable NHS medical services in rural areas.

For more information
Pharmaceutical Needs Assessments: Information Pack: England

Pharmaceutical needs assessment: guidance: Wales

Category M was introduced into the Drug Tariff in England and Wales in April 2005 and it is the mechanism used to adjust the Drug Tariff reimbursement prices of well over 600 generic medicines in England, Wales and to inform those listed in the Scottish Drug Tariff.

Category M uses information gathered from manufacturers on volumes and prices of products sold plus information from the NHSBSA Prescription Services on dispensing volumes to set prices that ensure that the total contract funding available to pharmacies contains the agreed amount of retained purchase profits. Until 2023-24 this amount is set at £800 million in England (and proportionate amounts in Wales and Scotland).

Category M presents the following problems for dispensing practices:

  • It takes no account of dispensing doctors’ remuneration, nor the actual prices paid by dispensing doctors
  • Prices are set in advance each quarter, and products may not be available to purchase at this price
  • Estimated and actual volumes of medicines dispensed may differ, which will lead to a subsequent adjustment, affecting cash-flow.

For more information
Drug Tariff for England & Wales

Drug Tariff for Scotland

In dispensing practice, discount recovery deductions (known as ‘clawback’) are applied by the NHS to all reimbursements (irrespective of the actual purchase price) in order to control profits on NHS purchases. Where available discounts are less than the applicable clawback rate, the dispensing practice will dispense at a loss. 

In community pharmacies a range of drugs are classified as ‘Discount Not Deducted’ (DND) and thus, have no clawback applied to the reimbursement the pharmacy receives, protecting pharmacy profits.

For more information
Pharmaceutical Services Negotiating Committee website information on discount deduction and items classified as DND.  

Branded generics
‘Branded generic’ drugs are generic medicines which bear a brand name.   Branded versions of metformin MR (the generic), for example, are Bolamyn, Diagemet, Glucient, Metabet and Sukkarto.

Some primary care organisations operate prescribing incentive schemes which favour the prescribing of branded generics by GPs where these drugs have a list price below the Drug Tariff reimbursement price for the generic. These schemes may be short-term in nature and overall, represents a ‘false economy’ for the NHS.

The DDA does not support branded generic prescribing for the following reasons:

  • It affects competition in the generics market and, with this, long-term market dynamics and prices
  • It upsets the calculations that the NHS uses to price the reimbursement of generic drugs and the clawback rate applied to dispensing GPs
  • It can result in stock shortages in the short- and long-term
  • It can result in increased workload and expense claims
  • It can affect medicines adherence as patients may receive an unfamiliar drug presentation.

To understand the false economies of branded generic prescribing, read this article.

Remuneration – rurality
An independent report has identified that higher costs of service delivery in rural areas are related to the following factors:

  • longer staff travel times
  • higher staff travel costs
  • diseconomies of scale (both as a provider or user of services)
  • lack of alternative services.

Other costs may relate to lack of network connectivity, higher overall staff costs and low-volume order surcharges.

NHS funding allows for unavoidable variations in costs related to geography and demography (age). However, a 2019 review suggests these adjustments may not be sufficient for the financial health of rural health services. The Scottish Parliament has also recognised that NHS funding for medical services in rural areas is subsidised by dispensing income.

For more information
Fair Shares – a guide to NHS allocations: NHS England

Costs of service delivery in rural areas: NHS England

Rural health care: A rapid review of the impact of rurality on the costs of delivering health care: Nuffield Trust

Scottish Government official report June 24 2014. Col 5732. Health and Sport Committee