Dispensing Doctor Buying Groups; Are They a Good Idea?
Ever since retail pharmacy realised there was strength in numbers, especially purchasing power, the buying group was formed. Does anyone know who the first retail pharmacy buying group was? Email me if you know, or leave a comment, it’s something I would be interested in.
Anyhow, I first came across the idea of Buying Groups in the late 1990s, and to memory the only one specifically set up for Dispensing Doctors was the North Yorkshire Emergency Doctors or NYED for short. This small group evolved and became the buying group called PSUK.
We all know how a buying group operates; members pay a monthly or annual fee and in return the buying group negotiates discounts or special offers for their dispensing doctor members. A good buying group will also offer plenty of help, support and expert advice to its members and it is these value-added extras which define a good buying group.
Currently at the time of writing there are only two main dispensing doctor buying groups, PSUK, who I have already mentioned and Forte. I will not go into detail here about what each of them has to offer, and I won’t comment on the value either of them could add or the support they could give to a busy dispensary manager.
Dispensary managers need to find out the facts and get the details and if they want my opinion on value against cost, they are more than welcome to contact me to get my thoughts,
Any buying group which can make the life of a busy dispensary manager easier whilst increasing dispensary profitability should be good value for money. Especially if it can save valuable time currently spent hunting down the best Manufacturer Discount Schemes [MDS] , Generic schemes, Specials or Parallel Imports.
But beware, each member must make sure they are actually signed up to all MDS available from their buying group as sign up is not always automatic.
For a dispensing practice, the question is could I negotiate a better set of discounts myself? And how much time would that take me? Is it worth it? What if I miss a great deal?
Each buying group should show its strengths in a public display via its website, if the website is lacking in content and information or is overly hidden behind membership login, its more difficult to work out the benefit of such a buying group. I prefer any organization which openly displays what it can do for its members, much in the same way I prefer net pricing rather than time delayed rebates which hide the true purchase price. Imagine shopping in your local supermarket and they said “oh we can’t tell you the price of those beans, but we guarantee that in two weeks’ time we can transfer you over some money into your account to make it the best price for beans as of today’s date…”
And what of new buying groups? Are there any new ones forming? Are any of the major retail pharmacy groups looking to move into the dispensing doctor landscape? Could a retail pharmacy group accept dispensing doctors into its membership? With the advent of Primary Care Networks and CCG buying power and negotiation what is the future for dispensing doctor buying groups?
Lots of questions; and it will be interesting to see what the answers are.
So, to sum up; to my mind buying groups are certainly well worth looking into if you are a dispensing doctor.
Drug Tariff News January 2021
REMEMBER from April 2021 the Drug Tariff will no longer be printed and distributed in hard copy form. The Drug Tariff will continue to be published on a monthly basis and accessible at the following website link: https://www.nhsbsa.nhs.uk/pharmacies-gp-practices-and-appliance-contractors/drug-tariff.
Please take some time to digest the changes and if you do not understand anything, then please email@example.com
Profitability and efficiency have been severely tested over the last year, and we must guard against losing money unnecessarily. If your dispensary needs further assistance, then get in touch. For January we are continuing our FREE Profitability Checking service.
Remember the Electronic Version of the Drug Tariff is available 3 working days before the start of the next month
Alastair Carmichael, Pharmacist and Dispensing Doctor Expert adds “When January arrives, there can be some surprises in the Drug Tariff, especially since it is a Category M quarterly price change time. In most cases the best situation is to declare as many scripts for December as possible to ensure the best outcome for your business cash flow.
Check through as many prescription forms as possible and add these to your totals.“
What to look for in the January 2021 Drug Tariff changes
Additions: A number of items have been added to the Drug tariff from January 1st, 2021 but these will have little effect on your dispensary. Alastair Carmichael makes the point that “A few lower turnover items are being added in the generic descriptions – meaning there is less need to endorse items which will save valuable time in the dispensary
Deletions: Firstly, go and look at the list of items being deleted from the Drug Tariff which can be found here for January 2021:
IMPORTANT – if you are still writing any of these items generically you should ensure that you make it clear which brand, manufacturer, or supplier you have dispensed against these prescriptions or they may be returned for you for further information which will delay payment and can impact on your dispensary cash flow. Further advice from Alastair Carmichael “There are quite a few products listed here that are now lesser-used, obsolete or discontinued. The products can still be used on script, but check your shelves and use the stock if you can.”
Some to watch out for especially are:
Atropine 600microgram tablets x 28
Calcium lactate 300mg tablets x 84
Cimetidine 800mg tablets x 30
Ethinylestradiol 1mg tablets x 28
Galantamine 12mg tablets x 56
Galantamine 8mg tablets x 56
Click here to read the other changes to the Drug Tariff for January 2021:
Some important changes are shown below. Please note this list is not exhaustive and you should check the full list.
|Ropinirole 1mg tablets||84||5415p||A|
|Ropinirole 1mg tablets||84||2282p||M|
|Memantine 10mg/ml oral solution sugar free||50ml||5515p||A|
|Memantine 10mg/ml oral solution sugar free||50ml||1655p||M|
|Moclobemide 150mg tablets||30||2825p||A|
|Moclobemide 150mg tablets||30||2210p||C||Sandoz Ltd|
|Nystatin 100,000units/ml oral suspension||30ml||305p||M|
|Nystatin 100,000units/ml oral suspension||30ml||180p||C||Nystan|
|Aspirin 75mg tablets||28||138p||A|
|Aspirin 75mg tablets||28||121p||M|
In all of the above case the reimbursement price has dropped from January 1st 2021. If you are currently purchasing any of the above at a price ABOVE the new Drug Tariff price you should ensure the main body of the prescription clearly states which brand, manufacturer, or supplier item you have dispensed to ensure the dispensary is not losing out.
There are also changes where the reimbursement price has gone up to a new figure, these are of less importance to the dispensary.
The rules are as follows:
Make sure you are purchasing for LESS THAN the Drug Tariff or NHS List Price or you will need to ensure that you write the prescription accordingly by manufacturer, supplier or brand name or you will lose money on each prescription dispensed!
If you are dispensing a brand, then check your purchase price against the Drug Tariff price for a generic prescription for this item if you are paying more, you must make sure the supplier or brand name is listed on the right-hand side of the prescription.
When dispensing a brand with a purchase price below the generic equivalent Drug Tariff price, you leave the prescription written as a generic and you will be reimbursed the higher Drug tariff price.
The Mystery of the Open Exeter Statement
Every month someone, somewhere in the surgery will have access to your dispensary’s reimbursement figures via the mysterious Open Exeter Statement.
This should ideally be the shared with the Dispensary Manager.
If you are managing your dispensary and you don’t have access to this, you just wont be able to keep on top of your dispensary business performance.
This document viewed online or preferably downloaded and printed out for analysis gives you all the information you need to determine how your dispensary is performing in terms of spend and profitability.
But do you know how to interpret the data presented?
For example, the Open Exeter statement dated September 2020 relates to the dispensing carried out in June. This means you would need to compare it to your June wholesaler spend, prescription charges collected and dispensed items to ensure no reimbursement is going missing.
It is a fine art making sure that what you submit for payment is getting paid into your bank account. If you find discrepancies between the number of items you claimed for and the number of items paid on a regular basis then you have a problem. The same goes for analysis of reimbursement against total spend on medicines.
Over my twenty-five plus years of working with Dispensing Doctors I have fine tuned the analysis of Open Exeter versus Wholesaler Spend.
Look at the Open Exeter Statement below – does it all make sense to you?
If you need help, advice and commercial support to make sure your dispensary is running profitably, and an analysis of your Open Exeter Statement vs Wholesaler Spend there is a special offer on this service for January 2021 to help you start the year on the right foot.
Are You Losing Dispensing Income and You Don’t Even Know It?
Working my way through a dispensary’s monthly purchase books and comparing to the Open Exeter statement is a good way to get an overall view of the profitability of dispensing. Usually, the actual wholesaler spend is less than the NHS reimbursement. And if this is the case, the dispensary bumps along as normal making a profit.
But as part of my investigations, the wholesaler statement may have this big, long list of manufacturers and the discounts given to the dispensary. This is very reassuring to the dispensary management team as they can see the manufacturer name and discount received.
I will not mention any company names here, but here are some genuine sample figures from a dispensing GP practice wholesaler statement:
This piece of information, presented very clearly, shows the level of discount given across a wide range of branded products. On the actual sheet there are twenty-six companies who are showing/giving a discount of less than 10% with an approximate spend of £2,800 for the month.
I went on to discuss this with the dispensary manager who assumed that this discount was on top of their 12% wholesaler discount and that this meant that all twenty-six companies were helping to increase the dispensary income. I explained that this was not necessarily the case which led to a deafening silence as the realisation hit this dispensary manager.
The fact is that further work needs to be done, and the wholesaler needs to provide clear and accurate information about this sort of thing to dispensary managers.
With clawback at 11.18% and across those twenty-six discounts the average was about 6%, then where no wholesaler discount is being given on top of the manufacturer discount, each item is dispensed at a loss of 5.18%.
If this is applied to all twenty-six company schemes the loss to the practice [before dispensing fees] is 5.18% of £2,800 which is £145.04 per month or £1,740.48 per year. That is a substantial amount of money to be losing and it needs to be addressed.
Email firstname.lastname@example.org to find out how we can help your Dispensary profitability and analyse your surgery spend versus NHS income and benchmark your profitability.
Drug Tariff Changes January 2021 – Don’t Get Caught Out!
When January arrives, there can be some surprises in the Drug Tariff, especially since it is a Category M quarterly price change time. Some thoughts for the month of December that may have consequences for January:
Cash-flow end January – Remember that December wholesaler purchases can be the highest of the year and these will need to be paid at the end of January. At the same time, NHSBSA will be paying for the prescriptions declared for November (balance thereof) and the “advance” of 80% for December scripts. Whilst December prescription figures are generally high, the 80% figure does not often compensate for the much higher invoice payments. Add the fact that 31st January 2021 is Tax Collection Deadline, the cash flow for any dispensing business can become very tight. Therefore consider:
Brand Stock levels – in December patients may request their medicine early and thus some products will be used late in the month and may not be required early January – hold back expensive orders until necessary to order for the next month.
Generic stock levels – In general keep your stock levels lower at the end of the month so that you are not left for higher priced generics that may have a reduced Drug Tariff price in January due to the new Category M prices.
If you or your dispensary manager has time to study the prices, then click on the following link after about 20th December to check for the new Cat M prices:
Drug Tariff Additions January 2021:
There are quite a few lower turnover items being added to Drug Tariff Part VIIIA for January 2021, which means there is less need to endorse items and this should lead to time saving in the dispensary. As the January 2021 additions are all Category C the reimbursement price should be based on the original brand or supplier mentioned.
Check your purchase price against the current supplier or brand list price now and keep an eye out to see if the reimbursement price changes in January and adjust accordingly.
The golden rule is you must purchase as much stock at a cost below Drug Tariff price wherever possible.
Full list here:
Drug Tariff Deletions January 2021
There are quite a few products listed here that are now lesser-used, obsolete or discontinued. These products can still be dispensed but check your shelves and use the stock if you can. Remember that if the prescription is written generically, that from January 1st 2021 you will need to make sure the body of the prescription lists brand or supplier name.
Where a generic item is not listed in the Drug Tariff it is always best practice to ensure supplier or brand name is included in the order.
For example, from the list of deletions if the prescriber ordered:
Calcium lactate 300mg tabs x 84
From January 1st, 2021 this should be ordered on the prescription as:
Calcium lactate 300mg tabs (insert supplier or brand name here) x 84
Check the full list online and run-down stock where appropriate:
Drug Tariff Changes January 2021:
Please see below the full list of Drug Tariff Part VIIIA changes for January 2021. The reimbursement prices are yet to be confirmed, but will be based on the supplier or brand of the item from January 1st 2021:
|Atropine 3mg/10ml solution for injection pre-filled syringes||1||Category A will be:|
|1||Category C Aguettant Ltd|
|Moclobemide 150mg tablets||30||Category A will be:|
|30||Category C Sandoz Ltd|
|Pioglitazone 15mg / Metformin 850mg tablets||56||Category A will be:|
|56||Category C Competact|
|Risperidone 2mg orodispersible tablets sugar free||28||Category A will be:|
|28||Category C Mylan|
As these are all moving from Category A [price based on a basket of generic prices] to Category C the price should stabilize. As always, check the Drug Tariff price against your purchase price to ensure you are not dispensing at a loss!
Drug Tariff Update – December 2020
Dispensing doctors need to be aware that from April 2021 the Drug Tariff will no longer be printed and distributed in hard copy form. March 2021 will be the final month in which a printed Drug Tariff will be circulated. The Drug Tariff will continue to be published on a monthly basis and accessible at the following website link: https://www.nhsbsa.nhs.uk/pharmacies-gp-practices-and-appliance-contractors/drug-tariff.
Please take some time to digest the changes and if you don’t understand anything, then please email@example.com Profitability and efficiency have been severely tested over the last year, and we must guard against losing money unnecessarily. If your dispensary needs further assistance, then get in touch.
Remember the Electronic Version of the Drug Tariff is available 3 working days before the start of the next month
Make time to have a read of the Preface
Current Issues for December 2020:
Amlodipine 2.5mg tablets (New strength) – entering as a Cat A generic at £5.30
IMPORTANT – make sure you are purchasing for LESS THAN this Drug Tariff price or you will need to ensure that you write the prescription accordingly by manufacturer, supplier or brand name or you will lose money on each generic prescription dispensed!
Salbutamol 100mcg/dose dry powder inh cartridge – 200 dose – Cat C based on Salbulin Novolizer at £2.75
Sumatriptan 3mg/0.5ml prefilled injections – Cat C based on Sun Pharmaceuticals price – in replacement of Imigran but at a lower dose of 3mg. Reimbursement Price is now £39.50.
IMPORTANT if you are dispensing a brand with a higher cost price that £39.50 against a generic prescription for this item you must make sure the supplier or brand name is listed on the right hand side of the prescription.
Generic descriptions for the following items have been removed from the Drug Tariff since they have been discontinued, but if you have stock still it is likely to be very nearly out of date! It can still be used and dispensed, but full details of manufacturer, price and pack size need to be endorsed:
Amoxil 125mg/1.25ml 20ml paediatric – long gone are the days for using loads of this each week!
Synalar N ointment
Locoid cream and ointment – 30g pack size only – Therefore if no stock of 30g left, an order for “Hydrocortisone butyrate 0.1% 30g” cream or ointment must be endorsed as giving 100g – if that is available!
Manevac granules 400g
Paracetamol 500mg / Metoclopramide 10mg Tabs x 42 – Paramax tablets
Only 3 other price changes are listed for very low usage items:
Haloperidol 5mg/1ml soln for inj ampoules x 10 – was Cat C at £35.00 but now Cat A at £38.50
Paracetamol 1g suppositories x 10 – Another price increase from Cat C £59.50 to Cat A £59.75
Quetiapine 20mg/ml oral susp SF x 150ml – was Rosemount price of £132.00 – now Cat A at £115.64
IMPORTANT – check your purchase price of this product and ensure that if you are buying for above the new Drug tariff price you are correctly making sure the prescription states which brand or supplier you are dispensing. If your purchase price is above Drug Tariff price you will lose money if these prescriptions are not correctly written.
Profitable Dispensing Tips – Modified Release Brands
The clinical decision must always come first, the patient must receive treatment according to their clinical need and prescribing decisions always need to be based on clinical need. In my experience of working with dispensing doctors for over twenty five years, it is generally accepted that for patients on a modified release medicine, continuity of a specific manufacturer “brand” of the medicine should be dispensed to the patient each time.
In a dispensing practice this can lead to opportunities to benefit the patient by giving them a continuous supply of medicine, which is the same brand each month, and ensure an income supply for the dispensary.
For example, where the Drug Tariff reimbursement price is based on the original brand, there may be newer manufacturers who have come into the market with a lower NHS list price and may even offer a discount to dispensing doctors.
This is how it works, lets use some round numbers to make it as simple as possible.
The Drug Tariff price for modified release product A is £20.00 per pack.
The NHS List price for a branded version of modified release product A is £15.00 per pack.
The actual purchase price of branded version of modified release product A is £10.00 per pack.
So where the prescription is written generically for modified release product A the default reimbursement price is the Drug Tariff price of £20, but where the branded version has been dispensed, at a purchase price of £10, then the margin on dispensing is £10 less clawback.
The patient gets continuity of supply and the dispensary assures its income stream which in turn funds rural healthcare provision.
Tip of the week – look at your modified release dispensing and prescribing, especially where the purchase price and Drug Tariff prices are high. Check your high volume modified release dispensing as well, target your top five modified release “generics” and work out if there are alternatives to the original brand or the “generic” as supplied by your wholesaler.
For a couple of examples of modified release brands which are priced at well below the Drug Tariff price email me firstname.lastname@example.org and I will send you the details free of charge
For an informal FREE chat about your dispensary profitability just contact me by the above email – always happy to help.
How Many Items per Hour are you dispensing?
So many phone calls I have taken over the years begin something like, “Greg, we’ve had the annual accounts back and the dispensary is showing a loss for the year…” to which my initial response [in my head] is surprise to put it mildly. A dispensary which is losing money is almost unheard of and usually it turns out that the reality is there has been a drop in the profit generated rather than a dispensary losing money.
It is at this point that the Dispensary Manager and I both let out a sigh of relief, I mean, showing a loss in profit is bad, but at least it isn’t an actual loss to the surgery.
So we talk through the problems that might have led to a drop in income, for example, if the dispensing fee has dropped by 5% in a year, then a drop of income of 5% in that year wouldn’t be unexpected, or at least with further investigation of the figures we could find where the drop in income was coming from.
It might be that the margin on generics had dropped for the year across the board for all practices or it could the figures show a rise in the cost of running the dispensary? Or is the dispensing speed being severely affected by poor dispensary layout and design? What are the dispensary running costs year on year, month on month?
Far too often the management accounts for the dispensary are held in secret by the GP partners and the Dispensary Manager is left in the dark. I would advise that all Dispensary Managers have full access to the management accounts for the dispensary and that these are produced monthly for large dispensaries, quarterly reports would suffice for most dispensaries. This is the only way you can manage a business and if you compare year on year accounts, like with like, you can spot trends or signs of a problem.
The question is are you the Dispensary Manager? If you are expected to manage the dispensary as a business you need all the tools to do so, you are the manager of a business.
Two questions for every dispensary manager:
What percentage of your time do you devote to managing the dispensary and what percentage of your time do you spend dispensing?
Secondly do you know how many items per hour your dispensers are currently dispensing [handing over not bagging up] to your patients?
Email me your answers to email@example.com and I will give you my opinion on what you should be doing/what your dispensing speed should be.
And for November we are giving free initial distance support via Microsoft teams, Zoom or the good old phone – get in touch now as we are introducing a NEW distance mentoring and support service for dispensary managers. Not just a one-off visit with a report you cant implement, we want to give Dispensary Managers professional and impartial help and support at a fair cost to the practice.
Its all about the patient – if your dispensary closes, where will the patient get their medicine from?