Part of the agreement for the 2005 contract was that pharmacies would work with the Department of Health to develop information about purchase prices and margins, and the margins survey was developed over the years following.
From April 2014 BSA has taken over the data gathering stage of the inquiry from PSNC; PSNC has retained full rights of audit and access. Initially BSA will follow the process developed by PSNC as described below; future developments will require PSNC’s agreement.
Margins survey process
- Pharmacy and drug samples are drawn by the Department of Health; these are checked by a statistical expert retained by PSNC.
- Invoices are collected from the sample independent pharmacies. A database is populated with all transactions of drugs in the sample. Details of low spend surcharges are captured to be factored into the results. This will now be done by BSA; PSNC will conduct a mirror inquiry and discrepancies will be reconciled.
- Data cleansing and checking are carried out jointly by the Department of Health and PSNC. For 2014/15 PSNC’s work on this resulted in £2m saving for contractors.
- Supplier discount calculations created by the Department from the wholesaler statements are scrutinised by PSNC.
- The results are calculated by the DH and PSNC conducts further analysis of the data and audits the answers. PSNC also conducts checks for any generics that have not been available during the survey year; where generics are not available but a brand or special has been available, the generic NIC is transferred to brand or special. Once the final answers are agreed between DH and PSNC, they are used to inform the negotiations for contractual framework funding.
For a more detailed explanation of the Margins Survey methodology PSNC has produced the following document: