Category M reimbursement prices will increase by £15 million a month from August 2018, the Department of Health and Social Care (DHSC) has confirmed.
The increase is because DHSC has agreed to cease the £15 million per month reduction in prices that had been in place to recover estimated excess margin delivered to pharmacies in 2015/16 and 2016/17.
These reductions had been in place since August 2017 and had been set to continue. This was because the latest Margins Survey results from 2016/17 suggest that there was over-delivery of margin in that financial year, with some excess yet to be recovered by DHSC. The decision to cease the Category M price reductions to recover margin now was a result of negotiations with PSNC in which the PSNC raised concerns about the impact of price reductions on contractors’ cash flow.
However, underlying Category M prices will continue to be based on manufacturers’ data so prices will still reflect the lower purchase prices that led to the additional reduction in prices seen in the July Tariff.
PSNC Director of Pharmacy Funding Mike Dent said:
“The decision to cease margin recovery in the short-term in light of PSNC’s representations about contractors’ cash flow is very positive and reflective of the collaborative relationship that we are trying to rebuild with the DHSC.
PSNC will be working, through the negotiations on funding and in discussions with the Department, to get the best possible deal for contractors and to ensure that any future mechanisms to correct margin delivery are as manageable as possible in terms of cash flow.”
A series of FAQs have been developed to further explain what this means for contractors. These are available here.