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Practice Finance - Drug tariff update

Dr Lisa Silver highlights latest Category M changes.

Each month the Drug Tariff is issued with minor changes, while every quarter there is a major adjustment to the price of around 500 Category M generic drugs.

These are adjusted to deliver a guaranteed purchase profit for pharmacies as opposed to dispensaries.

October to December's Category M Drug Tariff prices were announced at the beginning of September. This gave dispensing practices time to absorb the price changes by running down stock that had been bought at prices higher than current reimbursement and remained on shelves. It would otherwise be dispensed at a loss.

Read the preface to the Drug Tariff each month, this features the drugs that will be off patent next month

Price variation
Gabapentin, in all its formulations, had the greatest price reductions with gabapentin 800mg tablets dropping by £101.34 for 100 tablets down to £83.38.

It is important that, when a generic drug appears to be highly priced, you reduce your stocks prior to the end of each quarter. Doing this means you are not caught out by significant Category M price falls and do not have to dispense the stock at a loss.

Keep an eye on phenytoin 100mg at the end of this current quarter: back in December 2004, the tariff priced phenytoin at £1.64 for 28 tablets but it steadily climbed in price.

In July 2006 it was priced at £13.85 for 28 tablets but by October 2007 had reached a staggering £113.62. The price then fell to £40 in January 2008 and has declined by £5 per quarter since.

There is a chance that there could be a sudden tariff reduction in the quarter beginning in January 2009, so make sure your shelves are not loaded with phenytoin at the end of this year.

Branded prescribing
One of the problems with Category M is that the prices are set to include an element of purchase profit. This is a fundamental part of the pharmacy contract funding arrangements, but because Category M reimbursement prices may be higher than branded prices, some PCTs are encouraging branded prescribing. This quirk in the system is not welcomed by pharmacies and may not be in the interests of the NHS.

When products are prescribed generically, pharmacies seek out the best generic prices which drives down the wholesaler prices and, in turn, reduces the Drug Tariff price and the price to the NHS. If branded prescribing is encouraged when a more expensive generic is available, the higher price of the generic is maintained and, in the long run, costs the NHS more as there is no pressure on generic suppliers to reduce prices.

Category M generics now include 512 products and, of these for the quarter from October to December, 179 products rose in price; 31 had no price change; and 302 fell in price. The price rises are all small, except with the more unusual products that are rarely used such as dapsone or trihexphenidyl 2mg which rose by £10.79 for 84 tablets.

Note that co-fluampicil 250mg/250mg in packs of 28 and 100 has entered the Category M list along with perindopril 2mg, 4mg and 8mg in packs of 30.

Drug Tariff changes
It is important that you read the preface to the Drug Tariff when it is issued each month. Here you will find those drugs that will be off patent the following month.

When this happens, if you continue to prescribe the drug generically as most of us do, you will only be reimbursed the price of the generic drug as opposed to the branded item.

In order to dispose of branded stock left on your shelves once the drug goes off patent, you will need to prescribe the drug in its branded form so that you are reimbursed the correct price.

Once you have used up the branded stock you can continue to prescribe the item generically and dispense the generic item.

Recently, Casodex - an expensive product that is used frequently in practice - came to the end of its patent period and should now be prescribed as bicalutamide. Check whether you have any Casodex stock left on your shelves and that it is prescribed as such to ensure correct reimbursement.

Finally, when CFC-containing beclometasone asthma inhalers become unavailable, make certain you have the best dispensing deal possible on your choice of CFC-free beclometasone inhalers, currently only available as the brands of QVAR and Clenil Modulite.

  • Dr Silver is a dispensing GP in Oxfordshire

Category M Scheme

  • Category M was introduced into the Drug Tariff in April 2005 with the inception of the new community pharmacy contract.
  • It is used to adjust the reimbursement price of more than 500 products and the tariff price is calculated using information taken from manufacturers on the volumes and prices of the products they sell.
  • This information, plus information from the Prescription Pricing Division on dispensing volumes, is used to calculate the margins in the supply chain which then delivers pharmacy the purchase profit income as promised as part of the new pharmacy contract.
  • Tariff price reimbursement for dispensing practices is therefore dependant on how the tariff is adjusted each quarter for pharmacy, to account for any over or underpayment to pharmacies for the Category M drugs they dispense.
  • The Category M scheme is monitored very closely by the Pharmaceutical Services Negotiating Committee to ensure that purchase profit is maintained for pharmacy.


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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