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Understanding drug pricing

Keep up to date with the Drug Tariff changes each month says Dr Lisa Silver.

Knowing what goes where in the Drug Tariff, published monthly by the Prescription Pricing Division, and which sections to prioritise can help every dispensing doctor ensure their practice does not lose out on price changes or other alterations that could hit income.

Always look out for price changes. These are easy to find throughout the Tariff, because they are highlighted with a triangle pointing up or down to indicate a rise or fall in price.

Read the preface
First stop every month should be the preface. Here you will find a summary of the details found throughout the Tariff. By skimming through this chapter regularly you will soon find it is second nature to spot the changes that will make a difference to your dispensary.

Look out for the list of drugs that have been deleted and are no longer reimbursable and drugs that are changing category from brand to generic.

Also note where the price is moving from a generic price to one based on the branded price and drugs that are to become zero-discounted so could potentially lose the dispensary money if dispensed.

There are references to the numerous changes in the chapters of the Tariff that refer to dressings, stoma bags, borderline substances and appliances.

The best chapter for dispensing GPs is Part VIII, where you will find a list of the range of drugs prescribed every day. They are listed alphabetically by generic name. Where there is no generic alternative, the branded name is placed in italics on the far right hand side. Part VIII also lists the pack size for the particular drug.

This is where you find the basic price of any particular product - the price that is the starting point for calculating reimbursement. It is also where the dispenser can look to work out if they need to endorse a product or not.

Against each entry is a category listing, of which there are five (see box below).

If a drug is listed in Part VIII, the price indicated will be used as the starting point for reimbursement regardless of what has been dispensed.

For example if a patient indicates that they would like Zestril (a branded drug) as opposed to Lisinopril (which is a cheaper, generic Category M product), the prescription would need to be written as Zestril.

If you write the prescription as Lisinopril, and endorse it with Zestril, you will only be reimbursed the price of Category M Lisinopril, and not the more expensive Zestril.

An exemption to this rule is if there is a shortage of a Part VIII generic that has been identified by the DoH and a No Cheaper Stock Obtainable (NCSO) status has been granted. Here you can endorse the script NCSO plus the name of the supplier to receive a payment based on what has been supplied.

You will be aware that a drug is going into short supply, as you will find it difficult to purchase it from your supplier.

- Dr Silver is a dispensing GP in Oxfordshire

- Next week: understanding the signs and symbols

 Drug Tariff Part VIII

Category A Drugs that are readily available where the reimbursement price is calculated from a basket list of suppliers.

Category B Drugs where usage has declined over time.

Category C Drugs where the price is based on a particular brand or supplier.

Category E Extemporaneously prepared items.

Category M Drugs that are readily available, and where the reimbursement price is calculated by the Department of Health based on information submitted by manufacturers.


 Reimbursement and remuneration

Item not listed in the Tariff? go to the GMS Statement of Financial Entitlements (SFE), paragraph 17. The amounts payable in relation to the provision of drugs and appliances are calculated using the following information.

  • Basic Price (Part II Drug Tariff, Clause 8, 10, 11, 13 & Part VII Drug Tariff)
  • Discount Scale (3.17-11.18%) (SFE, Annex G, Part 1)
  • VAT Allowance (SFE, Paragraph 17.3 (c))
  • Dispensing Fees (SFE, Annex G, Part 2)
  • Out of pocket expenses (Part II, Clause 12)

NCSO status


The DDA is the only organisation that ensures the views of dispensing practices are heard by the government and key negotiating bodies. We also provide telephone advice to members and essential updated information via our website, and email alerts. To find out more call Jeff Lee on (01751) 430835 or visit www.dispensingdoctor.org

The DDA does not necessarily support or endorse the opinions or information contained on this page.

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