rpas

1. RPAS CONFERENCE
7 November 2008
Andrew Vickerstaff
Practice Manager
Aultbea & Gairloch Medical Practice

2. AGENDA
• Dispensing practices
– How many, where?
– Comparison of demographics, rurality and deprivation
with Scottish average
• Comparing dispensing practices with community
pharmacies
– Difference Scotland vs. England
– Cost breakdown 2007/08
– Trends per item dispensed
• Scottish drug tariff changes

3. Proportion of Scottish practices that
dispense
Dispensing practices represent 12% of practices but just 3% of patients in Scotland. Dispensing
practices are either small or dispense to just a proportion of their total list.
Source: www.isdscotland.org/GPpracs&pops July 2008

4. Number of Dispensing Doctor
practices in each health board area
Dispensing practices are situated around the periphery of Scotland, far from the centres of
population in the central belt
10
9
11
28
11
2
19 5 3
1 1
5
7 5
13
Total 130 dispensing practices
Out of 1,084 Scottish total
Source: www.isdscotland.org/GPpracs&pops July 2008

5. Dispensing practice contract types
Dispensing practices tend to have GMS contracts with their board where dispensing income
accrues to the practice.
Source: www.isdscotland.org/GPpracs&pops July 2008

6. Scottish dispensing doctor patient
demography
Dispensing patients are older on average. The data implies a national average age of 40 years,
whereas dispensing patients are on average 43 years old.
Source: www.isdscotland.org/GPpracs&pops July 2008

7. Scottish dispensing doctor patient
rurality
Dispensing patients are much more likely to live in remote and rural areas of Scotland than for the
nation as a whole. 85% of dispensing practice patients live in areas classed as rural.
Source: www.isdscotland.org/GPpracs&pops July 2008

8. Scottish dispensing doctor patient
deprivation
Dispensing patients are on average very similar in deprivation to the Scotland average.
Dispensing patients are much more likely than average to be classified in the middle quintile of
deprivation.
Source: www.isdscotland.org/GPpracs&pops July 2008 & SIMD 2006 methodology

9. AGENDA
• Dispensing practices
– How many, where?
– Comparison of demographics, rurality and deprivation
with Scottish average
• Comparing dispensing practices with community
pharmacies
– Difference Scotland vs. England
– Cost breakdown 2007/08
– Trends per item dispensed
• Scottish drug tariff changes

10. Dispensing practices & community
pharmacies – England comparison
Dispensing practices are twice as important as a proportion of total NHS dispensing activity south
of the border.
3.5m £608m
178k £36m
Source: www.isdscotland.org , www.ppa.org.uk data for year to end March 2008

11. Dispensing practices & community
pharmacies – England comparison
The difference between pharmacy and dispensing practice costs is less pronounced in England. Overall costs per
patient are lower.
TOTAL COST PER PATIENT
Pharmacy Disp practice
£210.00
£204.08
£200.00
£192.30
Total cost per patient per year
£190.00
£180.00
£173.29
£171.66
£170.00
£160.00
£150.00
England Scotland
Source: www.isdscotland.org , www.ppa.org.uk data for year to end March 2008

12. NHS Cost per item of drugs dispensed
Dispensing practices dispense items which are on average more than £2 per item cheaper. This
difference is growing as the average price per item has reduced over time.
Source: www.isdscotland.org , 2008/09 Q1 annualised

13. Dispensing volume per patient
Dispensing practice patients receive an average of 2 items per year more than community
pharmacy patients and this difference has remained as total items dispensed has grown.
Source: www.isdscotland.org , 2008/09 Q1 annualised

14. NHS cost per patient of drugs dispensed
Dispensing practices dispense more drugs but they are cheaper so the drug cost per patient overall is
less than community pharmacists and reducing.
Source: www.isdscotland.org , 2008/09 Q1 annualised

15. Dispensing fees per patient served
Fees to dispensing practices are higher per patient but have not been growing whereas pharmacist
fees have increased to close the gap.
Source: www.isdscotland.org data for year to end March 2008

16. Dispensing fees including VAT
The difference in VAT treatment increases the gap per patient significantly between dispensing
doctors and community pharmacies.
DISPENSING FEES PER PATIENT INCLUDING VAT
£70.00
£60.00
£50.00
£40.00
Community pharmacies
Dispensing doctors
£30.00
£20.00
£10.00
A
D
V
T
d
u
g
n
p
y
a
c
e
s
r
t
)
(
f
l
i
£-
2004/05 2005/06 2006/07 2007/08 2008/09 Q1
Source: www.isdscotland.org , 2008/09 Q1 annualised

17. Breakdown of fees
Fees structures reflect the difference between the new community pharmacy contract and dispensing
doctor payments (which have not changed since the Red Book).
£169.5m
TOTAL FEES 2007/08 £10.1m
100%
Oxygen & adjustments
90%
80% Minor ailment scheme,
methadone, public health
svcs, etc.
70%
VAT
60%
Other
Oncost
50%
Container allowance
Pharmacy only payments
40%
Transitional payments
Dispensing fees
30%
20%
10%
0%
Community Pharmacists Dispensing Doctors
Source: www.isdscotland.org data for year to end March 2008

18. Total NHS cost per patient served
The gap is reducing, but dispensing practices are still around £10 more expensive per patient served
per year.
Source: www.isdscotland.org , 2008/09 Q1 annualised

19. Total NHS cost per patient excluding
VAT
Take out VAT, and dispensing doctors are cheaper overall and the gap is widening.
TOTAL COST PER PATIENT EXCLUDING VAT
£195.00
£190.00
£185.00
Community pharmacies
Dispensing doctors
£180.00
£175.00
A
D
V
T
g
n
p
y
a
c
x
e
s
r
t
)
(
f
.
l
i
£170.00
2004/05 2005/06 2006/07 2007/08 2008/09 Q1
Source: www.isdscotland.org , 2008/09 Q1 annualised

20. AGENDA
• Dispensing practices
– How many, where?
– Comparison of demographics, rurality and deprivation
with Scottish average
• Comparing dispensing practices with community
pharmacies
– Difference Scotland vs. England
– Cost breakdown 2007/08
– Trends per item dispensed
• Scottish drug tariff changes

21. Introduction of Category M
Generic drug reimbursement prices in Scotland have plummeted since the adoption of Category M in April 2006.
Pharmacy transitional payments compensate them for the effect on their income. Dispensing practice contracts in
Scotland have not changed.
Cat M introduced Basket of Category M Products
10,000
9,000
Basket includes:
8,000
Amlodopine 5 & 10mg
7,000 Lisinopril all strengths
Omeprazole caps 5 & 10mg
Pence per pack
6,000
5,000 Simvastatin all strengths
4,000
3,000
2,000
1,000
-
6
7
06
Ju 7
Ju 8
6
7
8
6
7
8
6
Ju 7
7
06
Ju 6
Ju 8
8
6
07
7
08
8
M 6
M 7
M 8
O 6
Ja 6
O 7
Ja 7
O 8
M 6
M 7
M 8
-0
-0
-0
-0
0
-0
0
-0
-0
-0
-0
-0
-0
-0
-0
-0
l- 0
l- 0
l-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
n-
n-
n-
n-
n-
n-
ov
ov
ug
ug
ug
ay
ay
ar
ar
ar
ay
ct
ct
ct
pr
eb
eb
ep
eb
pr
pr
ep
ep
ec
ec
Ju
Ja
A
A
A
N
N
A
A
A
D
D
F
F
F
S
S
S
Source: www.isdscotland.org , AV analysis

22. Impact of Category M
In this example, the adoption of Cat M has led to an almost 90% reduction in reimbursement price for amlodopine
10mg tabs x 28. This is not unusual. The equivalent strength of felodopine is not classed in the same category and its
price has remained higher & generally more stable.
Impact of Becoming Cat M
Felod10mg MR Amlod10mg Cat M
1,400
1,200
Cat M introduced
1,000
Pence per pack
800
600
400
200
-
6
7
06
08
07
6
7
8
Ju 6
6
Ju 7
Ju 8
8
6
7
7
8
6
Fe 7
7
8
06
Fe 8
M 6
M 7
O 7
Ja 7
M 8
6
O 6
Ja 6
O 8
M 7
M 8
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
-0
l- 0
0
l- 0
-0
0
l- 0
-0
-0
-0
-0
-0
-0
0
0
-0
-0
-0
n-
n-
n-
n-
n-
n-
b-
b-
ov
ov
ay
ay
ay
ug
ug
ug
ar
ar
ar
ct
ct
ct
eb
pr
ep
pr
ep
pr
ep
ec
ec
Ju
Ju
Ju
Ja
A
A
A
N
N
M
A
A
A
D
D
F
S
S
S
Source: www.isdscotland.org , AV analysis

23. Summary of analysis
What has lead to the perception of “high cost“ and “perverse incentives” of dispensing practices?
• Dispensing practices differ from community pharmacies
– Patients are older and more remote on average. Patient
deprivation is less extreme by standard methods.
– Dispense more but cheaper items.
– Gap in fees per patient is reducing but payment scales are very
different
– Reimbursement of VAT makes dispensing practice more
expensive overall per patient
– Dispensing practices are getting cheaper over time, whereas
pharmacy costs continue to grow
• Category M has had a huge negative impact on generic drug
reimbursement prices & hence dispensary income

24. Dispensing doctor contract discussions
How to address the perceived and real cost differences between pharmacies and dispensing
practices.
• VAT reimbursement makes dispensing doctors more expensive
– NHS gain is HMRC loss if practices forced to register
– Big increase in practice administration costs
– Practices lose VAT on drug margin
• BUT dispensing practices have lost out due to Cat M
• What do we want?
– Protection from pharmacy encroachment
– Income stability
• What could we offer?
– Investment in patient services
– Adopt a dispensing doctor formulary
– Take on pharmacy quality and training standards
– Provide local pharmacist services without cost duplication