§ Mr. Knoxasked the Secretary of State for Social Services what changes he intends to make to the method of reimbursing chemists to take account of the advantageous prices now available for some drugs.
§ Mr. Kenneth ClarkeThe present contract between the Government and retail pharmacists is based on the reimbursement to the pharmacist of the actual cost of the drugs he dispenses. However, for some time now pharmacists have been able to obtain large discounts when they purchase drugs from wholesalers and this enables some pharmacists to make unintended profits, over and above the negotiated profits in the contract, when we reimburse them at manufacturers' list prices. We attempt to deal with this by withholding some of the reimbursement by an amount representing the usual discount which the pharmacist ought to be able to obtain. We assess the usual level of discount prevailing by holding periodic inquiries. This covers the practice of most pharmacists in a fair way. However, some are now obtaining exceptionally high discounts on some drugs and making large unintended profits when they are reimbursed by the NHS for their NHS prescriptions.
Last May I announced new safety controls on imported drugs and referred to these difficulties. I said then that we were considering with everyone concerned how we could modify the reimbursement system to make the arrangements fairer for the taxpayer, the pharmacists and the pharmaceutical industry. We have now decided to introduce new arrangements setting the amount withheld for deemed discounts at two levels, depending on whether drugs used in a prescription were obtained at ordinary or exceptionally high level. In dealing with this new situation, I want to continue to encourage the system to maintain a reasonable level of discounts generally, without allowing those pharmacists who are able to obtain some drugs at very advantageous prices to make very large unintended profits on a limited range of their supplies. The 219W round of consultations is now being completed and I propose to introduce the following modifications, to apply to NHS prescriptions dispensed in England and Wales on and after 1 January 1985. The existing reimbursement arrangements will continue, but in addition the pharmacist will be required to endorse those prescriptions for which he has used a drug obtained from whatever source, at a discount of more than 12 per cent. When those prescriptions are prices at single average rate of discount, 20 per cent. of the current drug tariff price, will be applied to them, and reimbursement will therefore be at 80 per cent. of the drug tariff. These arrangements will apply to all discounts, including extended credit, free goods and discounts for cash. I intend to keep this situation on exceptional discounts under very close review and the rates of threshold and single discount to be introduced initially may be changed, as necessary, in the light of information available on discounts generally. Full details of the revised arrangements will be promulgated to pharmacists, family practitioner committees and the pricing authorities as soon as possible.