Contractor notice: Category M price reduction

Contractor notice: Category M price reduction

May 13, 2016

The Department of Health (DH) has announced reductions to Category M prices which will apply to prescriptions between June and September 2016, after which they will be reviewed.

The changes represent a reduction to generic medicine reimbursement prices (Category M) for June to September 2016 worth £12m per month, equivalent to £48m for the four-month period.

The reductions are being made by DH in response to the preliminary findings of the 2015/16 medicines margin survey. Their intention is to reclaim excess margin that they believe was delivered to contractors in 2015/16 above the agreed allowed £800m. PSNC accepts that margin levels were high during the period, but has not agreed to the reduction.

DH stated in a letter to PSNC that they felt the data was robust enough to support at least a £12m per month reduction. DH said they would reconsider the position for October onwards in consultation with PSNC, once finalised 2015/16 medicine margin survey results are available. DH projections suggest that the October Drug Tariff is unlikely to see a significant recovery.

The Drug Tariff will be amended to reflect the new prices and the June 2016 prices are available on the NHS Prescription Services website.

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