Health and Care Bill: reimbursement arrangement exceptions for vaccines and pandemic treatments
Updated 10 March 2022
© Crown copyright 2022
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/health-and-care-bill-factsheets/health-and-care-bill-reimbursement-arrangement-exceptions-for-vaccines-and-pandemic-treatments
This factsheet explains how the government plans to enable exceptions from the usual reimbursement arrangements for community pharmacies so that if they receive vaccines and/or pandemic treatments from a central supply and so do not pay for them, there is no need for them to be reimbursed which could allow for centrally procured stock to be shared free of charge with pharmacy contractors.
1. Background
The typical process by which community pharmacies obtain medicines can be summarised as follows; wholesalers purchase stock from manufacturers, which they sell to pharmacies who in turn supply it to patients. This could be in accordance with a prescription, a serious shortage protocol, a patient group direction or a pandemic treatment protocol. The pharmacy then claims reimbursement from the NHS for the product supplied. This is according to the arrangements set out in Secretary of State (or NHS England) determinations which are published monthly in the Drug Tariff. The legal basis for these arrangements is set out in Section 164 of the NHS Act 2006 and section 88 of the NHS (Wales) Act 2006. The Drug Tariff sets out a total payment package for the service provider that includes an amount that is referable to the cost of the product supplied and an amount that is referable to the service cost, for example doing the clinical check, advising the patient, etc. Payments linked to the supply of products are termed reimbursement and, in connection with service fees, termed remuneration.
The assumption is that even if the service provider received the product for free, they will be reimbursed for dispensing it. This precludes an arrangement whereby NHS England or DHSC centrally procures products and then requires community pharmacies to source them from the central supplier at no cost to the community pharmacy. Regardless of the fact that the community pharmacy has paid nothing for the product, the scheme of the Act is such that there is an obligation from them to be reimbursed for it, unless there is a statutory exemption that applies, which we are now adding to.
An exemption was previously made for unlicensed medicines (more commonly known as specials) in 2017 in order to address issues in the market for these products, which have since been partially addressed in other ways.
2. What will the Bill do?
This provision seeks to add, in a limited way, further exemptions from the general obligation that community pharmacies needed to be reimbursed for the products supplied as part of pharmaceutical services in England and Wales and as a consequence to facilitate central purchasing. There are various reasons why we may now seek to centrally procure vaccines; or products used to treat a pandemic disease.
For example, in the case of pandemic treatments, in a global health emergency caused by a pandemic, pressures from global demand may mean that central purchasing and direct supply to community pharmacies is critical to maintain continuity of supply for UK patients in England without the risks of wholesalers increasing prices or exporting the stock.
The government wants to have the option to able to supply the product ‘directly’ free of charge to pharmacies, without needing to sell into the supply chain in order to allow the ordinary reimbursement arrangements to function - which is what the current statutory framework steers us towards. Equally, in these circumstances, we would not want to reimburse pharmacies as well as purchasing the stock, otherwise the government would be paying twice for the product.
3. These provisions will help to promote integration, reduce bureaucracy, and improve accountability and public confidence
It is anticipated that the proposed amendment would result in benefits to the NHS. In the absence of the amendments, where it is deemed appropriate for products to be centrally stocked and supplied free of charge to community pharmacies, the legislation currently steers us in a different direction. To keep everything on a robust statutory footing, the NHS would need to sell stock to wholesalers, who would in turn sell to community pharmacies, who are in turn reimbursed by the NHS. Such an approach would be inefficient and create potential risks as the NHS would have no control over the price or volumes at which wholesalers sold to community pharmacies.