PSNC seeks fairer price concession system

PSNC seeks fairer price concession system

January 30, 2018

PSNC and the Department of Health and Social Care (DHSC) have been holding discussions on changing the system for setting price concessions.

As reported in our summary of the January PSNC meeting, PSNC is seeking a system that is more responsive to price rises, and ensures community pharmacy contractors do not carry unreasonable costs on behalf of the NHS.

The numbers of products and levels of price increases since summer 2017 have caused a substantial increase in the NHS drugs bill. It is also continuing to cause considerable problems for contractors, who are already under massive pressure following Government cuts to funding and recovery of excess margin earned in previous years.  PSNC has been working to ensure that DHSC is aware of the hardship the price rises are imposing on contractors.

Currently, PSNC makes its claim for price concessions to DHSC, who then verify them using data they collect from manufacturers and wholesalers, and, if they believe it to be appropriate, set a concession price.

PSNC has agreed key principles for a fair system, recognising the need for the NHS to continue to meet affordability challenges for medicines. The principles include:

  • Community pharmacy contractors must not be the victims of adverse events or activity further up the supply chain;
  • Any pricing system must balance fairly contractors’ duty to supply with a reasonable purchase risk;
  • PSNC must be able to provide data about price rises, but accepts that DHSC will want to verify this and that this leads to some period of uncertainty over pricing;
  • Any data used to set prices must relate to the period for which a concession is given; and
  • PSNC must be able to challenge proposed price concessions.

Whilst agreeing these principles, PSNC was mindful of the fact that although contractors should not face unfair risks, and costs of supply problems should not be passed on to them, purchasing medicines for the NHS is a huge part of what the sector offers for the NHS. Successful buying reduces costs for the NHS, and community pharmacies should continue to try to drive prices down.

PSNC will continue to press for immediate improvements to the price concessions system, but believes that forthcoming regulation on the disclosure of information on healthcare products will have an impact on managing price concessions, when a refined system can be established which makes use of the increased data capture.

We will update contractors as soon as we have more information. In the meantime, LPCs and community pharmacy teams may find the following guidance and resources helpful.


Generic shortages: Communications support

Communicating with patients

PSNC Briefing 004/18: Dispensing & Supply Factsheet: Information on medicines supply for patients (January 2018)
When community pharmacy teams struggle to source medicines, this can lead to queries from patients as to why there are delays. PSNC has therefore created this factsheet which provides some lines that could be used to explain the situation to patients.

Resources for LPCs

LPCs can download resources aimed at communicating these drug shortages with prescribers and the public from this page of the LPC Members Area (login required).

Handling the media

If local media contact you for a comment or an interview, you may wish to use the following lines:

  • Pharmacy teams are working hard to source vital medicines for patients.
  • Community pharmacy has a key role in ensuring the supply of medicines for patients. There are shortages of important medicines, but we aren’t seeing evidence of patients going without medicines or of harm. Pharmacists are doing all kinds of things to assist patients, such as “staged” dispensing, liaising with GPs to find alternatives, many phone calls to wholesalers etc. The workload is massive.
  • All of this is part of the service provided by pharmacies to look after patients and public.
  • On top of this, as we head into winter pharmacy teams are regularly providing advice to patients with common ailments, which is a big workload burden for them given cuts in funding and staffing pressures, but it helps GP pressures particularly at this time of year.

Further support is available from the PSNC Communications Team by emailing zoe.long@psnc.org.uk or mmabbutt@psnc.org.uk.

What PSNC has said

It may also be beneficial to be aware of the recent statements PSNC has given on this topic.

In response to an earlier request for comment from the Health Service Journal (HSJ), Mike Dent, Director of Pharmacy Funding at PSNC, said:

“We have seen an increase in supply issues with generic medicines since June 2017. Higher prices on these lines mean CCGs are facing a significant financial risk. Generics prices in England are incredibly low compared to most parts of the world. The policy to incentivise community pharmacies to reduce medicines prices for the NHS has worked incredibly well. Generics is a global market, so international manufacturers can choose to sell where they will make the best financial return.”

Following the story in The Times in December 2017, PSNC published this article and Mike Dent, Director of Pharmacy Funding at PSNC, commented:

“We are receiving unprecedented numbers of calls from community pharmacy teams who cannot get hold of certain medicines that patients need despite their best efforts; or who are having to pay prices many times more than the NHS reimbursement price. This has been going on for many months. When we request price concessions, the Department of Health always makes its own inquiries following reports from us to validate the availability and prices around the country.”

Interview on BBC Radio 4’s PM programme
PSNC committee member Bharat Patel gave an interview to the PM programme on BBC Radio 4 on the evening of 7th December 2017. Click on the link above to listen to a clip of it.



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