We often get asked about whether an item is a Personally Administered item or not.
In the case of Nexplanon the answer to this question is two-fold and confusing to say the least:
1 NHS Prescription Services do NOT classify this item as being personally administered even though even the Patient Information Leaflet instructions states:
“Nexplanon should be inserted and removed only by a healthcare professional who is familiar with procedures as described on the other side of this leaflet”
A quick check of the Dictionary of Medicines and Devices will confirm this.
In the case of Nexplanon as it isn’t classified as a PA item NHS Prescription Services will NOT reimburse the VAT “element” to the practice when the prescription is submitted for reimbursement.
The VAT “element” payment is a historic payment which dates back decades and amounts to the current VAT rate of the NHS list price AFTER clawback has been applied.
2 However, HMRC, DO classify Nexplanon as a Personally Administered item for VAT purposes.
This is presumably because HMRC take the view that Nexplanon must be Personally Administered by a Health care Professional. And as it is NOT a takeaway item HMRC will not reimburse the VAT paid out when purchasing Nexplanon from a supplier.
So, what does this mean for dispensing doctors?
Effectively each time a dispensing practice purchases a Nexplanon they are potentially losing out on the VAT element they pay to their supplier.
This means that dispensing doctors are less likely to dispense Nexplanon unless there is a discount scheme in place to make up for the shortfall in the VAT they have lost out when purchasing.
So how does a dispensing doctor mitigate against this if the discount from the supplier is less than the VAT they can’t recover?
Of course, all dispensing practices will and do dispense items and medicines for the benefit of their patients, the patient must always come first, especially where there is no other way the item can be dispensed to the patient.
In many cases the dispensing practice will just accept that this item may be being dispensed at a loss and will dispense regardless. Other practices may ask for the item to be dispensed at the local pharmacy before administration.
Dispensing Doctor Experts believe that the clinical decision and patient health outcome must always come first when making any decisions about the choice of treatment a patient is offered, regardless of the financial implications.
Dispensing Doctors are advised to seek further advice and information from their supplier as to the rate of VAT being charged and whether there is any discount available on Nexplanon and what this equates to.
For accounting purposes, a dispensing practice should seek professional advice from a suitably qualified accountants such as Moore and Smalley on all matters relating to VAT.
This article is published to explain the VAT status of Nexplanon and is not designed to give any clinical information.