NHS vs private prescription drugs - who profits?
Discussion
The other day I got a private prescription for some antibiotics (employer-provided health insurance pays for private GP appointments, so no cost to me for the consultation or prescription being issued). The cost to me, paid to the pharmacy: a whopping £4.35.
Now, if I had gone to my NHS GP I would've had to pay the £9.35 prescription charge. My question is, would that 'profit' be retained by the pharmacy, or passed to the NHS? I'm sure if the drug cost was more than the prescription charge, the NHS would pay the pharmacy, but does it work both ways on some kind of margin scheme (a bit like doing a VAT return)?
Now, if I had gone to my NHS GP I would've had to pay the £9.35 prescription charge. My question is, would that 'profit' be retained by the pharmacy, or passed to the NHS? I'm sure if the drug cost was more than the prescription charge, the NHS would pay the pharmacy, but does it work both ways on some kind of margin scheme (a bit like doing a VAT return)?
It's probably wrong to connect the prescription cost to the cost of the meds you receive. its more about the service (or a crude form of user taxation)
the charge is collected and managed the the NHS business service authority, and presumably just goes to NHS coffers. I am not a pharmacist (maybe one will be along in a bit to explain properly) the pharmacy sends the prescriptions it dispenses to the NHS and is remunerated a set fee for handling the paperwork, much like dentists I think this relates to an annual contract for expected performance - presumably the cost of drugs is rolled into this or claimed depending on stock used. - I think I read that this contract equates to 80% of the pharmacy income, the rest being over the counter sales, for corn plasters and sun cream etc'
in terms of the cost of medicines the NHS drives massive discounts for many of the drugs that get prescribed. If you had to pay the drug cost rather than a prescription cost you might get a shock - eg Nexium which is being advertised on the telly as I type , treats acid reflux - you can buy this over the counter cost 5.99 for 7 days, NHS cost 6.58 for 28 days.
the charge is collected and managed the the NHS business service authority, and presumably just goes to NHS coffers. I am not a pharmacist (maybe one will be along in a bit to explain properly) the pharmacy sends the prescriptions it dispenses to the NHS and is remunerated a set fee for handling the paperwork, much like dentists I think this relates to an annual contract for expected performance - presumably the cost of drugs is rolled into this or claimed depending on stock used. - I think I read that this contract equates to 80% of the pharmacy income, the rest being over the counter sales, for corn plasters and sun cream etc'
in terms of the cost of medicines the NHS drives massive discounts for many of the drugs that get prescribed. If you had to pay the drug cost rather than a prescription cost you might get a shock - eg Nexium which is being advertised on the telly as I type , treats acid reflux - you can buy this over the counter cost 5.99 for 7 days, NHS cost 6.58 for 28 days.
Pharmacies make their money in a few different ways:
1. Dispensing of drugs
1.1 A payment for dispensing medication - this is an activity fee per prescription
1.2 Reimbursement on the cost of the drugs. The pharmacy buys the drugs dispensed and these are then reimbursed by the NHS according to a set tariff. The secret for the pharmacy is to have bought the drugs for less than the NHS Drug Tariff.
This represents the vast majority of the income for a regular pharmacy (at least 80%). Note that both amounts paid have been dramatically reduced by the NHS in recent years.
It is anticipated that the next contract agreed between the NHS and community pharmacy will reduce these further.
2. NHS services
Like GPs (who are also private businesses with a contract with the NHS - correct, GPs are not part of the NHS), pharmacies are able to deliver certain health services. Examples include: flu jabs, blood pressure checks, medication reviews, smoking cessation. These are reimbursed on a per activity basis.
Services is the area where the NHS expects community pharmacy to do much more and the next NHS contract will reflect this. However, like all things NHS it isn’t joined up, and so many of the services will also form part of the GP contract - leaving primary care providers to squabble amongst themselves rather than work together for patients (happens already - every autumn pharmacies and GPs enter into the “flu wars”).
3. OTC sales
Selling shampoo etc usually represents less than 10% of a pharmacy’s income. Although that does vary - independent pharmacies often end up having a specialising is something niche (my parents’ nearby pharmacy sold mobility aids - won’t find those in one of the big chains’ stores).
The obvious exceptions are Boots and Superdrug who have long been retailers with the odd pharmacy in the back corner.
4. Private prescriptions
A tiny amount of money. Inconsequential to anything as hey are so rare - usually antibiotics.
Pharmacy used to be a good place to make money. With funding changes it’s much harder these days. But, like GPs and dentists (though they are both funded differently by the NHS), having the NHS as your paymaster does give some certainty of income.
1. Dispensing of drugs
1.1 A payment for dispensing medication - this is an activity fee per prescription
1.2 Reimbursement on the cost of the drugs. The pharmacy buys the drugs dispensed and these are then reimbursed by the NHS according to a set tariff. The secret for the pharmacy is to have bought the drugs for less than the NHS Drug Tariff.
This represents the vast majority of the income for a regular pharmacy (at least 80%). Note that both amounts paid have been dramatically reduced by the NHS in recent years.
It is anticipated that the next contract agreed between the NHS and community pharmacy will reduce these further.
2. NHS services
Like GPs (who are also private businesses with a contract with the NHS - correct, GPs are not part of the NHS), pharmacies are able to deliver certain health services. Examples include: flu jabs, blood pressure checks, medication reviews, smoking cessation. These are reimbursed on a per activity basis.
Services is the area where the NHS expects community pharmacy to do much more and the next NHS contract will reflect this. However, like all things NHS it isn’t joined up, and so many of the services will also form part of the GP contract - leaving primary care providers to squabble amongst themselves rather than work together for patients (happens already - every autumn pharmacies and GPs enter into the “flu wars”).
3. OTC sales
Selling shampoo etc usually represents less than 10% of a pharmacy’s income. Although that does vary - independent pharmacies often end up having a specialising is something niche (my parents’ nearby pharmacy sold mobility aids - won’t find those in one of the big chains’ stores).
The obvious exceptions are Boots and Superdrug who have long been retailers with the odd pharmacy in the back corner.
4. Private prescriptions
A tiny amount of money. Inconsequential to anything as hey are so rare - usually antibiotics.
Pharmacy used to be a good place to make money. With funding changes it’s much harder these days. But, like GPs and dentists (though they are both funded differently by the NHS), having the NHS as your paymaster does give some certainty of income.
Edited by OMITN on Sunday 8th May 08:18
OMITN said:
Pharmacies make their money in a few different ways:
1. Dispensing of drugs
1.1 A payment for dispensing medication - this is an activity fee per prescription
1.2 Reimbursement on the cost of the drugs. The pharmacy buys the drugs dispensed and these are then reimbursed by the NHS according to a set tariff. The secret for the pharmacy is to have bought the drugs for less than the NHS Drug Tariff.
This represents the vast majority of the income for a regular pharmacy (at least 80%). Note that both amounts paid have been dramatically reduced by the NHS in recent years.
It is anticipated that the next contract agreed between the NHS and community pharmacy will reduce these further.
2. NHS services
Like GPs (who are also private businesses with a contract with the NHS - correct, GPs are not part of the NHS), pharmacies are able to deliver certain health services. Examples include: flu jabs, blood pressure checks, medication reviews, smoking cessation. These are reimbursed on a per activity basis.
Services is the area where the NHS expects community pharmacy to do much more and the next NHS contract will reflect this. However, like all things NHS it isn’t joined up, and so many of the services will also form part of the GP contract - leaving primary care providers to squabble amongst themselves rather than work together for patients (happens already - every autumn pharmacies and GPs enter into the “flu wars”).
3. OTC sales
Selling shampoo etc usually represents less than 10% of a pharmacy’s income. Although that does vary - independent pharmacies often end up having a specialising is something niche (my parents’ nearby pharmacy sold mobility aids - won’t find those in one of the big chains’ stores).
The obvious exceptions are Boots and Superdrug who have long been retailers with the odd pharmacy in the back corner.
4. Private prescriptions
A tiny amount of money. Inconsequential to anything as hey are so rare - usually antibiotics.
Pharmacy used to be a good place to make money. With funding changes it’s much harder these days. But, like GPs and dentists (though they are both funded differently by the NHS), having the NHS as your paymaster does give some certainty of income.
Things are different in Wales, Scotland and Northern Ireland - what you've mentioned above applies to England only in the main.1. Dispensing of drugs
1.1 A payment for dispensing medication - this is an activity fee per prescription
1.2 Reimbursement on the cost of the drugs. The pharmacy buys the drugs dispensed and these are then reimbursed by the NHS according to a set tariff. The secret for the pharmacy is to have bought the drugs for less than the NHS Drug Tariff.
This represents the vast majority of the income for a regular pharmacy (at least 80%). Note that both amounts paid have been dramatically reduced by the NHS in recent years.
It is anticipated that the next contract agreed between the NHS and community pharmacy will reduce these further.
2. NHS services
Like GPs (who are also private businesses with a contract with the NHS - correct, GPs are not part of the NHS), pharmacies are able to deliver certain health services. Examples include: flu jabs, blood pressure checks, medication reviews, smoking cessation. These are reimbursed on a per activity basis.
Services is the area where the NHS expects community pharmacy to do much more and the next NHS contract will reflect this. However, like all things NHS it isn’t joined up, and so many of the services will also form part of the GP contract - leaving primary care providers to squabble amongst themselves rather than work together for patients (happens already - every autumn pharmacies and GPs enter into the “flu wars”).
3. OTC sales
Selling shampoo etc usually represents less than 10% of a pharmacy’s income. Although that does vary - independent pharmacies often end up having a specialising is something niche (my parents’ nearby pharmacy sold mobility aids - won’t find those in one of the big chains’ stores).
The obvious exceptions are Boots and Superdrug who have long been retailers with the odd pharmacy in the back corner.
4. Private prescriptions
A tiny amount of money. Inconsequential to anything as hey are so rare - usually antibiotics.
Pharmacy used to be a good place to make money. With funding changes it’s much harder these days. But, like GPs and dentists (though they are both funded differently by the NHS), having the NHS as your paymaster does give some certainty of income.
Edited by OMITN on Sunday 8th May 08:18
In Wales, Scotland and NI, NHS prescriptions are all "free" at point of need - only NHS England charges for prescriptions.
When all four countries charged for prescriptions @90% were provided free anyways due to the various criteria in play - in England this is still the case today. I do know that in Scotland when it moved ( over a period of time) to 100% free, there was actually a cost saving as the admin cost behind it all was reduced significantly - hence in fact making it cheaper to have everything free at point of need.
Pharmacies in Scotland dare very tightly controlled an deter case for opening a new one in an area has to be made with much evidence of need - none of the "if you open a 100 hour pharmacy you can just crack on" type attitude was allowed in Scotland, keeping the market stable and not having a glut of them driving quality down.
Pharmacy in Scotland is still both a good career move and still a good business move too - only the likes of Lloyds/Boots etc seem to be making an erse of it all in struggling to attract and retain pharmacists
Thanks for the replies, interesting! I should've known it was not straightforward 
So for an NHS prescription, the £9.35 charge goes to the NHS and the pharmacy gets reimbursed at the tariff rate for the drugs plus a transaction fee. (Looked it up - £2.55 plus an activity fee of £1.27 in this case). So they made slightly more as a private prescription but they're hardly coining it in either way!
So for an NHS prescription, the £9.35 charge goes to the NHS and the pharmacy gets reimbursed at the tariff rate for the drugs plus a transaction fee. (Looked it up - £2.55 plus an activity fee of £1.27 in this case). So they made slightly more as a private prescription but they're hardly coining it in either way!
sam greenock said:
OMITN said:
Pharmacies make their money in a few different ways:
1. Dispensing of drugs
1.1 A payment for dispensing medication - this is an activity fee per prescription
1.2 Reimbursement on the cost of the drugs. The pharmacy buys the drugs dispensed and these are then reimbursed by the NHS according to a set tariff. The secret for the pharmacy is to have bought the drugs for less than the NHS Drug Tariff.
This represents the vast majority of the income for a regular pharmacy (at least 80%). Note that both amounts paid have been dramatically reduced by the NHS in recent years.
It is anticipated that the next contract agreed between the NHS and community pharmacy will reduce these further.
2. NHS services
Like GPs (who are also private businesses with a contract with the NHS - correct, GPs are not part of the NHS), pharmacies are able to deliver certain health services. Examples include: flu jabs, blood pressure checks, medication reviews, smoking cessation. These are reimbursed on a per activity basis.
Services is the area where the NHS expects community pharmacy to do much more and the next NHS contract will reflect this. However, like all things NHS it isn’t joined up, and so many of the services will also form part of the GP contract - leaving primary care providers to squabble amongst themselves rather than work together for patients (happens already - every autumn pharmacies and GPs enter into the “flu wars”).
3. OTC sales
Selling shampoo etc usually represents less than 10% of a pharmacy’s income. Although that does vary - independent pharmacies often end up having a specialising is something niche (my parents’ nearby pharmacy sold mobility aids - won’t find those in one of the big chains’ stores).
The obvious exceptions are Boots and Superdrug who have long been retailers with the odd pharmacy in the back corner.
4. Private prescriptions
A tiny amount of money. Inconsequential to anything as hey are so rare - usually antibiotics.
Pharmacy used to be a good place to make money. With funding changes it’s much harder these days. But, like GPs and dentists (though they are both funded differently by the NHS), having the NHS as your paymaster does give some certainty of income.
Things are different in Wales, Scotland and Northern Ireland - what you've mentioned above applies to England only in the main.1. Dispensing of drugs
1.1 A payment for dispensing medication - this is an activity fee per prescription
1.2 Reimbursement on the cost of the drugs. The pharmacy buys the drugs dispensed and these are then reimbursed by the NHS according to a set tariff. The secret for the pharmacy is to have bought the drugs for less than the NHS Drug Tariff.
This represents the vast majority of the income for a regular pharmacy (at least 80%). Note that both amounts paid have been dramatically reduced by the NHS in recent years.
It is anticipated that the next contract agreed between the NHS and community pharmacy will reduce these further.
2. NHS services
Like GPs (who are also private businesses with a contract with the NHS - correct, GPs are not part of the NHS), pharmacies are able to deliver certain health services. Examples include: flu jabs, blood pressure checks, medication reviews, smoking cessation. These are reimbursed on a per activity basis.
Services is the area where the NHS expects community pharmacy to do much more and the next NHS contract will reflect this. However, like all things NHS it isn’t joined up, and so many of the services will also form part of the GP contract - leaving primary care providers to squabble amongst themselves rather than work together for patients (happens already - every autumn pharmacies and GPs enter into the “flu wars”).
3. OTC sales
Selling shampoo etc usually represents less than 10% of a pharmacy’s income. Although that does vary - independent pharmacies often end up having a specialising is something niche (my parents’ nearby pharmacy sold mobility aids - won’t find those in one of the big chains’ stores).
The obvious exceptions are Boots and Superdrug who have long been retailers with the odd pharmacy in the back corner.
4. Private prescriptions
A tiny amount of money. Inconsequential to anything as hey are so rare - usually antibiotics.
Pharmacy used to be a good place to make money. With funding changes it’s much harder these days. But, like GPs and dentists (though they are both funded differently by the NHS), having the NHS as your paymaster does give some certainty of income.
Edited by OMITN on Sunday 8th May 08:18
In Wales, Scotland and NI, NHS prescriptions are all "free" at point of need - only NHS England charges for prescriptions.
When all four countries charged for prescriptions @90% were provided free anyways due to the various criteria in play - in England this is still the case today. I do know that in Scotland when it moved ( over a period of time) to 100% free, there was actually a cost saving as the admin cost behind it all was reduced significantly - hence in fact making it cheaper to have everything free at point of need.
Pharmacies in Scotland dare very tightly controlled an deter case for opening a new one in an area has to be made with much evidence of need - none of the "if you open a 100 hour pharmacy you can just crack on" type attitude was allowed in Scotland, keeping the market stable and not having a glut of them driving quality down.
Pharmacy in Scotland is still both a good career move and still a good business move too - only the likes of Lloyds/Boots etc seem to be making an erse of it all in struggling to attract and retain pharmacists
sawman said:
It's probably wrong to connect the prescription cost to the cost of the meds you receive. its more about the service (or a crude form of user taxation)
the charge is collected and managed the the NHS business service authority, and presumably just goes to NHS coffers. I am not a pharmacist (maybe one will be along in a bit to explain properly) the pharmacy sends the prescriptions it dispenses to the NHS and is remunerated a set fee for handling the paperwork, much like dentists I think this relates to an annual contract for expected performance - presumably the cost of drugs is rolled into this or claimed depending on stock used. - I think I read that this contract equates to 80% of the pharmacy income, the rest being over the counter sales, for corn plasters and sun cream etc'
in terms of the cost of medicines the NHS drives massive discounts for many of the drugs that get prescribed. If you had to pay the drug cost rather than a prescription cost you might get a shock - eg Nexium which is being advertised on the telly as I type , treats acid reflux - you can buy this over the counter cost 5.99 for 7 days, NHS cost 6.58 for 28 days.
It goes both ways - right now I'm on (varying) medications via private prescription that's costing £130-£180 p/28 days.the charge is collected and managed the the NHS business service authority, and presumably just goes to NHS coffers. I am not a pharmacist (maybe one will be along in a bit to explain properly) the pharmacy sends the prescriptions it dispenses to the NHS and is remunerated a set fee for handling the paperwork, much like dentists I think this relates to an annual contract for expected performance - presumably the cost of drugs is rolled into this or claimed depending on stock used. - I think I read that this contract equates to 80% of the pharmacy income, the rest being over the counter sales, for corn plasters and sun cream etc'
in terms of the cost of medicines the NHS drives massive discounts for many of the drugs that get prescribed. If you had to pay the drug cost rather than a prescription cost you might get a shock - eg Nexium which is being advertised on the telly as I type , treats acid reflux - you can buy this over the counter cost 5.99 for 7 days, NHS cost 6.58 for 28 days.
Also, GPS have a habit of writing prescriptions for things you can buy over the counter for a fraction of the price.
OMITN said:
Absolutely right, particularly about the difficulty of accessing the Scottish market. If ever there was a case for the Competition and Markets Authority taking a look, that’s one.
Personally I don't think it is, its stops the nonsense that has happened in England regarding allowing "competition" to run amok by letting anyone open a pharmacy wherever they liked as long as you guaranteed it'd be open for 100 hours a week - which has been an abject failure in achieving a better service.In Scotland doctors can also provide a pharmacy service - 99% of time in rural areas, usually in far flung communities not big enough to support a community pharmacy. This, is some cases has allowed GP centres to make even more money than a pharmacy would have done, as they don't have to use actual pharmacists - I know of one where the GP practice was taking in £400,000 a year ( profit) in dispensing fees etc, someone applied to open a pharmacy - which has to be allowed if numbers back it up - GPs threw their toys out of pram(according to them the dispensing wasn't financially viable just a bonus service they provided) and promptly quit.
Anyways I digress, pharmacy regulation in Scotland has been looked at many times, competition isn't something that's lacking - just need to look at how many pharmacies lloyds, Boots etc bought and how many are failing.
Personally speaking I'd nationalise the whole thing and franchise out community pharmacies, stipulating that you cannot operate more than 3 franchises
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