2012/13 Funding Settlement

2012/13 Funding Settlement

The detail of the changes in contractor funding for 2012/13 are set out below. These changes were published in the October 2012 Drug Tariff and took effect from 1st October 2012.

2012/13 Funding Agreement

An interim funding settlement of £2,486m was put in place for the period 2012/13.

Fees & allowances 1,986
Agreed buying profit 500
Total funding 2,486

In previous years it was possible to agree total funding in time for this to be delivered through adjustments made from the October Drug Tariff onwards. But as the 2012/13 funding agreement was to take into account the results of the Cost of Service Inquiry (COSI), it was not possible to complete the negotiations in time.

As such the Department of Health made interim funding changes at this stage which were delivered by implementing adjustments to the Drug Tariff from October.

The changes took into account the provisional results of the 2011/12 margins survey, which showed that pharmacies’ retained purchase margin exceeded the sum allowed by £235 million in the previous financial year.

Changes in Fees and Allowances

There was no change to the fee levels of the dispensing fee, additional fees, repeat dispensing payment and EPS Allowances. The arrangements for the following fees and allowances changed with effect from 1st October 2012:

i) Establishment Payments

From October 2012 the level of the Establishment Payment remained unchanged however there has been an increase in the payment thresholds of 3%.

2,430 – 2,749 items p/m £23,278 per annum (1/12th per month)
2,750 – 3,059 items p/m £24,190 per annum (1/12th per month)
3,060 + items p/m £25,100 per annum (1/12th per month)

ii) Practice Payments

From October 2012 the threshold to receive the Practice Payment, other than a contribution for provision of auxiliary aids for people eligible under the Disability Discrimination Act, rose by 3% to 2430 items per month.

For contractors dispensing over 2430 items per month, the Practice Payment for the top level decreased to 58.2p per item.

Up to 1,099 items p/m £300 for Oct 12 to Mar 12
1,100 – 1,599 items p/m £2,980 for Oct 12 to Mar 13
1,600 – 2,429 items p/m £4,172 for Oct 12 to Mar 13
2,430 + items p/m 58.2p per item for Oct 12 to Mar 13


Settlement elements

The settlement arrangements included:

A reduction in Category M prices of £72.5 million per quarter from October 2012;

A £10m CIP package for pharmacy contractors, to recognise the impact of prescription payment inaccuracies.

More information

Explanation of the 2012/13 interim funding arrangements

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