2011/12 Funding Settlement

2011/12 Funding Settlement

The detail of the changes in contractor funding for 2011/12 are set out below. These changes were published in the October 2011 Drug Tariff and took effect from 1st October 2011.

These changes applied to England. Check the Drug Tariff for more details for changes to Wales.

2011/12 Funding Agreement

Total contractor funding increased to £2,486m, as well as a one off supplement of £40m.

Fees & allowances 1,986
Agreed buying profit 500
One off supplement 40
Total funding 2,526

The 2011/12 settlement was intended to reflect an interim years funding. PSNC voiced concerns about the impact of cuts in reimbursement prices on pharmacy cash flow and viability, and urged the Government to offer funding that provided stability for contractors, pending the conclusion of negotiations following the Cost of Service Inquiry (COSI). These concerns were listened to and accepted by the Minister in agreeing the settlement.

Changes in Fees and Allowances

There were no changes to the fee levels of the dispensing fee, additional fees, repeat dispensing payment, and EPS Allowances. Transitional payments ceased in England from April 2011. The arrangements for the following fees and allowances changed with effect from 1st October 2011:

i) Establishment Payments

From October 2011 the level of the Establishment Payment remained unchanged however there was an increase in the payment thresholds of 3%.

2,360 – 2,669 items p/m £23,278 per annum (1/12th per month)
2,670 – 2,969 items p/m £24,190 per annum (1/12th per month)
2,970 + items p/m £25,100 per annum (1/12th per month)

ii) Practice Payments

From October 2011 the threshold to receive the Practice Payment, other than a contribution for provision of auxiliary aids for people eligible under the Disability Discrimination Act, increased by 3% to 2360 items per month.

For contractors dispensing over 2360 items per month, the Practice Payment for the top level increased to 73.5p per item.

Up to 1,099 items p/m £100 for Oct 11 to Nov 11
1,100 – 1,599 items p/m £1,255 for Oct 11 to Nov 11
1,600 – 2,359 items p/m £1,756 for Oct 11 to Nov 11
2,360 + items p/m 73.5p per item for Oct 11 to Nov 11
Up to 1,099 items p/m £200 for Dec 11 to Mar 12
1,100 – 1,599 items p/m £2,632 for Dec 11 to Mar 12
1,600 – 2,359 items p/m £3,685 for Dec 11 to Mar 12
2,360 + items p/m 77.1p per item for Dec 11 to Mar 12

Settlement elements

The settlement included:

A reduction in Category M prices of £39 million per quarter from October 2011 to March 2012;

Removal of the Transition Payment; In England, Transitional Payments ceased from April 2011. In October 2010 PSNC secured agreement from DH to postpone recovery of £20m excess margin until 2011/12. The removal of the Transitional Payment was intended to recover part of this £20m. The remainder was been recovered by a reduction in the Practice Payment level from April 2011. Detailed payments levels were set out in Part VIA of the Drug Tariff.

From April 2012 generic medicine prices (Category M) reduced by an additional £40 million per annum;

A number of changes to drug reimbursement arrangements, including introduction of a ‘Specials’ Tariff from November 2011, and other changes later in the year;

A CIP package of £20 million for pharmacy contractors, to recognise the impact of prescription payment inaccuracies.

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