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Pharmacy White Paper - Dispensing doctors prove their cost-effectiveness

Government data shows that dispensing doctors use NHS resources effectively, writes Dr Allan Tennant.

The Dispensing Doctors' Association (DDA) has analysed the Prescription Pricing Division (PPD) monthly data on pharmacy, dispensing doctors and appliance contractors. It shows items dispensed, net ingredient cost (NIC), discounts and fees. 1

Now is a good time to analyse this data, in light of the publication of the latest consultation2 and, in particular, the impact assessment3 pertaining to dispensing doctors. This suggests that, by changing the distance criteria to pharmacy-surgery and thus reducing the number of dispensing doctors, a saving of £23 million can be made.

The DDA's initial analysis of the impact assessment suggests that there are grounds to question some of its conclusions.

In the meantime, our examination of the PPD data shows that dispensing doctors use NHS resources effectively. We advise colleagues to highlight this in submissions to MPs when responding to the consultation document on control of entry. These sums use DoH data.

The cost of drugs to the NHS has two elements: reimbursement of the cost of the actual drugs provided to the patient and dispenser's remuneration.

The disparity between pharmacy's £1.78 basic dispensing fee (£2.29 from this month) and the £2.14 fee paid to dispensing doctors may look as if a pharmacy dispensed prescription is much better value for the NHS than one dispensed by a dispensing practice. This is however far from the whole story.

In the 12 months to June 2008 the average discount abatement (clawback) from pharmacists' reimbursement was 8.67 per cent, whereas for dispensing doctors the figure was 11.05 per cent. If this were expressed as an annual sum, the cost to the NHS would be £6.1 million less than if the same drugs had been dispensed at a pharmacy.

But in addition, the average price per item upon which the discount is based was also less in dispensing practice than in pharmacy by some £1.04 an item. If this figure were translated into an annual sum the saving would be a further £62.9 million.

So on reimbursement alone, dispensing appears more cost-effective than pharmacy. But dispensing doctors prescribe more items each year for their patients and their dispensing fee structure is very different. Every year a dispensing patient receives 17.23 items compared with 15.63 for pharmacy users.

The PPD figures show that the average dispensing doctor fee per item is £2.14 while the average for pharmacy is £1.78 (rising to £2.29 this month).

This complex sum between discount levels, fees and cost of drugs to the government would appear to suggest that overall dispensing doctors use public money more wisely than their prescribing colleagues.

The actual difference in NHS cost before the latest increase in pharmacy funding is 49 pence per patient per year and since, unlike pharmacy, dispensing doctor figures include personally administered items, it seems wrong to claim that dispensing doctors overprescribe.

There are 3,510,895 dispensing patients in England from a total of 50,542,505 NHS patients. When the extra funding rightly given to pharmacies from 1 October (equivalent to 50.6p per item over the year) is taken into account, each dispensing patient will cost the country £8.46 less than one using a pharmacy.

Value for money
In the unlikely event that all patients were dispensing, the NHS would, on these figures, save some £392 million. This extrapolation is obviously entirely hypothetical but the conclusion that dispensing doctors provide value for money, neither prescribing nor dispensing excessively, is irrefutable.

However there is even more good news: with the changes in Category M (used to adjust the reimbursement prices of over 500 medicines) that occurred in 2007 from the first six months of 2006 to the last six months to May 2008, reimbursement per item for dispensing doctors fell from £9.70 to £8.50 (a 12.4 per cent fall). For pharmacy, the figures are £10.83 and £9.78 (a 9.7 per cent fall).

The fall in reimbursement prices would suggest that dispensing doctors have reduced costs to the NHS by significantly more than their prescribing colleagues over the past 12 months.

Comparing costs in the first quarters of 2006 and 2008, dispensing doctors saw a reduction of 4.6 per cent in total NIC compared with a reduction of only 0.5 per cent for items dispensed in pharmacy. Our NIC costs fell by nearly £6 million on a total NIC of £130 million, compared with prescribing patients, whose costs fell by £8.65 million on a total NIC of £1.795 billion.

  • Dr Tennant is vice-chairman of the Dispensing Doctors' Association PPD data analysis

PPD data suggests dispensing doctors:

  • are cost-effective
  • use prescribing resources very well
  • are reducing their costs to the NHS (more than their prescribing colleagues)
  • obtain discounts which they pass on to the NHS
  • do not prescribe or dispense excessively.


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.

DDA Action plan

DDA Action Plan for responding to the Pharmacy White Paper

  • Make individual responses to the consultation using the DDA's response form, available via our website.
  • Re-engage with your MP and send them your response.
  • Ask patients to respond individually using the response form, letter or email, sending a copy to their MP. (No petitions).
  • Engage with local press and attend DoH listening events.
  • Access further information at www.dispensingdoctor.org


1. DDA online tables of PPD data www.dispensing doctor.org/

2. Pharmacy in England: Building on strengths - delivering the future - proposals for legislative change.


3. Impact assessment of proposals concerning legislative arrangements governing NHS dispensing doctors.

www.dh.gov.uk/en/Consultations/Live consultations/DH_087324

Net ingredient costMinus Discount abatementPlus Overall fee (£)
EqualsCost per item
Items per annumAnnual cost per patient (£)
Pharmacy (Sept)9.978.67%1.78 10.8915.63170.21
Pharmacy (from Oct)9.978.67% 2.2911.40 15.63 178.18
Dispensing practice8.6711.05%2.149.8517.23169.72

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