Business aspects of ensuring a profitable dispensary

Richard West

This promotional meeting has been organised and funded by Takeda UK Ltd UK/VIP/1709/0152 Prescribing information can be found on the last slideDate of Prep : 19th Sept 2017

Disclosure

Sponsorship of talks on dispensing which have been supported by various

pharmaceutical companies including Takeda, Napp, Astra Zeneca, Bayer, Forte

Pharma.

Introductions and housekeeping

Overview and Agenda

This presentation provides expert insight into the business aspects of ensuring a profitable dispensary

1) Maximising dispensing income

2) What the Drug Tariff means to dispensing practices

3) Ensuring profitability of your dispensary

4) What you need to know about VAT

Speakers and disclosures

• Richard West – Dr Richard West, MBE, FRCGP, has been a partner in a dispensing practice for 20 years

and is the dispensing lead. He chaired the Dispensing Doctors Association for the last 10

years and so is well versed in how to run a successful dispensary and the pitfalls to avoid

• Amanda Chell– Amanda Chell is highly experience in providing support, training courses, products and

services to dispensing practices. She has been a Dispensing Manager for more than

5 years and can advise on all aspects of practical management

•Maximising dispensing income

The sources of dispensary income

• Reimbursement – money for NIC

• Remuneration – dispensing fee

• Dispensary Services Quality Scheme (DSQS)

• Private income

Remuneration: What is the dispensary fee and how is it calculated?

• Fee for providing the dispensing service

• It is split 60% expenses and 40% practice income

• Expenses element should cover staff costs, consumables, building

costs, accountancy costs and all other dispensary costs

• Same fee for everything except specials

• There are no extra fees

Remuneration: How is the total (envelope) negotiated?

• Nationally negotiated

• Currently on a formula

• 60% increases or decreases on the number of items

• 40% increases on Doctors’ and Dentists’ Remuneration Review

Board (DDRB) recommendations

• No inflationary increase

• No negotiation for the last few years

• Your fee envelope divided by number of items

• Changed in October and April

•What the Drug Tariff means to dispensing practices

Part VIIIA – Basic price, endorsement requirements and quantity to be supplied

• Part VIIIA is your basic price of drugs

• Price listed is not the price you receive due to clawback

• Any drug prescribed, generically written and not in the drug tariff will

need to be endorsed with pack size, manufacturer and price paid

• Prescriptions not endorsed in this way will be returned from

prescription services

Part VIIIA – Basic prices of drugs, categories A, C and M

• Category C – where reimbursement price is based on a certain brand

or manufacturer

• Category A – generically available: reimbursement price can go up or

down monthly

• Category M – so called ‘’cheap and cheerful generics’’:

reimbursement price will be fixed for 3 months

Part VIIIB – Specials payment

• Specials listed in part VIIIB – endorse XP£20 only to claim your out-

of-pocket expenses

• Specials not listed – endorse XP£20 + manufacturer licence number,

batch number and price which you have paid

• Tariff specials can be very profitable and should be sourced at around

50% under Drug Tariff price

• Non-tariff specials are generally prescriptions that you will lose

money on

• Always do the maths

Part IX – Approval list of appliances

• Part IX is your dressings, appliances, chemical reagents, stomas, etc.

• Anything with a CE mark denotes it as being an appliance

• Appliances have to be in the Drug Tariff to be allowed on FP10

• Appliances not listed in the Drug Tariff will be disallowed

Dispensing Appliance Contractors (DACs)

• Far more profitable than ‘DIY’

• Wardles + North West Ostomy Supplies (NWOS) are two

DACs suppliers

Part XVIIIA – Drugs, medicines and other substances not to be ordered under a General Medical Services Contract

• Part XVIIIA – more commonly known as the ‘blacklist’

• Products in this list have been prescribed at least once!

• If you prescribe anything that falls into part XVIIIA, the prescription

will come back as disallowed

• An opportunity for private prescriptions

•Ensuring profitability of your dispensary

Role of dispensary lead

• Every dispensary should have a dispensary lead

• Every dispensary should have a dispensary manager

• The dispensary manager needs to ensure that all stock is eventually

prescribed, taking any injectable into account

• The dispensary should matter to everyone – it should be run as a

business, not a charity!

Keep abreast of changing discounts

• Be aware of new manufacturers going to ‘Direct to Pharmacy

Schemes’ or ‘Reduced Wholesaler Model’

• Understand the implications of this on your dispensary profits

• Monitor manufacturer discount schemes and ensure all rebates due

are received

Direct ordering

• Certain companies, such as ClarityDTP, offer direct ordering

• Discounts are received at source so there is no waiting for

retrospective rebates to arrive

• These companies will have a small range of products but offer

excellent discounts

Generic loyalty schemes

• Generics are where your profit is to ensure your generic scheme is as

good as it can be

• Make sure that you understand your scheme

• Check with your generic supplier to see if any products do not fall into

the scheme

Short liners

• Have full range of generics and Parallel imports at net prices

• No targets/thresholds to reach

• Parallel imports – very profitable if sourced correctly

• A product that has no Manufacturer Discount Scheme (MDS) and

on reduced wholesaler discount will be more profitable as a

Parallel import

Buying groups

• ClarityDTP

• PSUK

• St Thomas Court

• Forte Group

• Dispensing Masters

Manufacturer discount schemes

• Sign up for everything

• Ensure you are ordering correctly, taking thresholds into account

• The practice should have a formulary of what products attract a

discount, and this should be accessible to everyone, regardless of

status

• Check out what products attract an MDS and see if you are

prescribing a ‘Me Too’

Wrong group movement

• This is money taken off you by Prescription Services

• Often an ‘admin error’

• There is no ‘second chance’

• Some practices are having as much as £1,000 taken off them each

month!

• Someone in the practice should be monitoring this area and acting on

it accordingly

What you need to know about VAT

VAT – The basics

• Must register for VAT

• You pay VAT on all drugs and can claim back VAT from HMRC, with the

exception of personally administered drugs

• The NHS gives a VAT allowance only on personally administered drugs

• You must keep a record of all the VAT you have paid

• You must have a system for identifying personally administered drugs

• You are likely to get a VAT inspection

• I strongly advise that you discuss VAT with your accountant and get

their help

HMRC Guidance – Personally administered items

• You cannot claim VAT back on personally administered (PA) items

• The definition is what you do with the item not what the item is

• So any item that a member of the practice administers to a patient is a PA item

• If the patient takes it away, it is not a PA item and you may claim VAT back

• For example, if you inject Prostap 3 DCS®

(leuprorelin acetate) into a patient, it is a PA. If the patient takes it away and someone else administers it, then it is not a PA and VAT can be claimed

• Therefore you need a system for recording this

VAT allowance

• The NHS gives you a VAT allowance on certain drugs, including all injections and sutures

• The NHS gives you a VAT allowance, no matter what has happened to the drug

• So you will get a VAT allowance on insulin, although it is not personally administered; you will not get a VAT allowance on a dressing even if you personally administered them

• So in some cases you can receive a VAT allowance and get your VAT reimbursed by HMRC and in some cases you get neither

• This is because the rule sets are different and are likely to remain so for the foreseeable future. Both the NHS and HMRC are aware of the situation and currently do not wish to change it

Dispensing Services Quality Scheme (DSQS)

• DSQS pays £2.58 per dispensing patient per year

• There has been no change since it was launched

• It is worth participating in

Private prescriptions

You can charge for:

– Private patients

– Travel immunisations

– Drugs that the patient is taking abroad (just in case)

– Malaria prophylaxis

– Drugs on the black and grey lists (Schedule 1 or 2 of the NHS

[GMSC] regulations 2004)

Charging for private prescriptions

The charge needs to include:

– Cost of drug

– VAT

– Cost of supplying it (a dispensing fee)

– A profit

Prostap 3 DCS – A worked example

• Please note that this discount only applies if Prostap DCS is ordered through Clarity Pharma.

Calculation formulaProstap 3 DCS example @ 16% Clarity Pharma

DiscountTOTAL

Basic Price - BP (BP – discount) x 20%) (£225.72 - £36.12) x 20% = £227.52

Clawback rate – CBR BP x CBR (11.18%) £225.72 x 11.18% =

NB: clawback rate varies by practices

£25.24

VAT allowance – VAT(A) (BP - CBR) x 20% (£225.72 – £25.24) x 20% = £40.10

Dispensing fee – DF1 DF x number of fees payable

depending on item

£1.96 x 2 =

(two DFs apply as a reconstituted item)

£3.92

PA allowance BP – CBR + VAT(A) + DF £225.72 – £25.24 + £40.10 + £3.92 = £244.50

TOTAL PROFIT @ 16% (£244.50-£227.52) £16.98

11st April 2017 dispensing fees. https://www.dispensingdoctor.org/news/dispensing-fees-fall-3-8-april/ [last accessed August 2017]

Choosing a DPP-4 inhibitor

VIPIDIA®

(alogliptin)Linagliptin Saxagliptin Sitagliptin Vildagliptin

LIST PRICE PER APPROPRIATE PATIENTS PER 28 DAYS

£26.60 £33.26 £31.60 £33.26 £33.35**

Cost of VIPIDIA with 40% Discount* £15.96 (Per appropriate patient per 28 days)

1.Type 2 diabetes in adults. https://www.nice.org.uk/guidance/ng28/resources/algorithm-for-blood-glucose-lowering-therapy-in-adults-with-type-2-diabetes-pdf-2185604173[Accessed Sept 2017]

2.Del Prato S, et al. Diabetes Obes Metab 2014; 16: 1239–1246.

3 White WB, et al. N Eng J Med 2013; 369:1327-1335

4.Vipidia Summary of Product Characteristics. available from www.medicines.org.uk/emc (last accessed Sept 2017).

5. NHS Business Services Authority, Drug Tariff Part VIIIA.Aug 2017. Available from www.nhsbsa.nhs.uk/prescriptionservices/4940.aspx (accessed August 2017)

*All wholesalers will charge a distribution fee/fuel surcharge fee which is individually agreed with each practice.

**Price per appropriate patient per 28 days calculated from a pack price per appropriate patient per 30 days

The NICE guideline on the management of Diabetes in Adults (NG28) suggests that prescribers should choose the individual DPP-4 inhibitor with the lowest acquisition cost available to them if two drugs in the same class are appropriate1

• Add Vipidia®▼ to metformin and you’ll get durable HbA1c reductions at 2 years2

• An established safety profile3,4

• All with the lowest acquisition cost of any DPP-4 inhibitor4

Prostap DCS Prescribing Information

PROSTAP SR DCS/ PROSTAP 3 DCS leuprorelin acetate depot injection

3.75mg/11.25mg PRESCRIBING INFORMATION FOR PROSTATE CANCER. Refer to

Summaries of Product Characteristics (SmPCs) before prescribing. Presentation:

Prostap SR: leuprorelin acetate 3.75mg powder, equivalent to 3.57mg base, powder and

solvent for prolonged-release suspension for injection in pre-filled syringe with safety

device. Prostap 3 DCS: leuprorelin acetate 11.25mg equivalent to 10.72mg base,

powder and solvent for prolonged-release suspension for injection in pre-filled syringe

with safety device. Indications: Prostap SR DCS/Prostap 3 DCS: adjuvant to radical

prostatectomy in patients with locally advanced prostate cancer at high risk of disease

progression; adjuvant to or neo-adjuvant prior to radiotherapy in patients with high-risk

localised or locally advanced prostate cancer; locally advanced prostate cancer, as an

alternative to surgical castration; metastatic prostate cancer; Dosage & Administration:

Prostate Cancer: Prostap SR DCS: 3.75mg administered every month as a single

subcutaneous or intramuscular injection. Prostap 3 DCS: 11.25mg every 3 months as a

single subcutaneous injection. Do not discontinue when remission or improvement

occurs. Response should be monitored clinically and if sub-optimal, check serum

testosterone is at castrate level. In patients treated with GnRH analogues for prostate

cancer, treatment is usually continued upon development of castrate-resistant prostate

cancer. Reference should be made to relevant guidelines. Elderly: as for adults.

Children (under 18 years): not recommended. Injection site should be varied periodically.

Contraindications: hypersensitivity to the active substance, any of the excipients or to

synthetic GnRH or GnRH-derivatives. Warnings & Precautions: aggravation of

diabetes may occur; more frequent blood glucose monitoring recommended in diabetic

patients. Hepatic dysfunction and jaundice with elevated liver enzyme levels reported;

close observation recommended. Spinal fractures, paralysis, hypotension, worsening of

depression have been reported. Prophylactic anti-androgen use should be considered for

patients at risk of ureteric obstruction or spinal cord compression. In the rare event of an

abscess occurring at the injection site, testosterone level should be monitored as there

may be inadequate absorption of leuprorelin from the depot formulation. May increase

risk of bone loss, particular caution in patients with additional risk factors for

osteoporosis. May prolong QT interval - particular caution in patients with a history of /or

risk factors for QT prolongation or receiving concomitant medicinal products that might

prolong the QT interval. Patients at high risk for metabolic or cardiovascular diseases

should be appropriately monitored. Postmarketing reports of seizures have been

reported in those with or without a history of epilepsy, seizure disorders or risk disorders

for seizures. Interactions: no studies performed. Carefully evaluate use with medicines

that prolong QT interval or induce Torsade de pointes. Undesirable Effects: If tumour

flare occurs, symptoms and signs due to disease may exacerbate e.g. bone pain and

urinary obstruction, which should subside on continuation of therapy. Very Common

(≥1/10): weight fluctuation, hot flush, hyperhydrosis, muscle weakness, bone pain, libido

decreased, erectile dysfunction, testicular atrophy, fatigue, injection site reaction e.g.

induration erythema, pain, abscesses, swelling, nodules, ulcers and necrosis. Common

(≥1/100 to <1/10): decreased appetite, insomnia, depression, mood changes (long-term

use), headache (occasionally severe), nausea, hepatic function abnormal, liver function

test abnormal (usually transient), arthralgia, gynaecomastia and oedema peripheral.

Frequency not known: lipids abnormal, glucose tolerance abnormal. Other serious

undesirable effects (frequency not known): anaemia, thrombocytopenia, hypersensitivity

reactions (including rash, pruritus, urticaria and rarely, wheezing or interstitial

pneumonitis, anaphylactic reactions), paralysis, seizure, electrocardiogram QT

prolonged, pulmonary embolism, jaundice and spinal fracture. Refer to the SmPC for

details on full side effect profile. Basic NHS Price: Prostap SR DCS £75.24; Prostap 3

DCS £225.72. Legal Classification: POM. Marketing Authorisation Numbers:

Prostap SR DCS: 16189/0012; Prostap 3 DCS: 16189/0013. Further information is

available from Takeda UK Ltd, Building 3, Glory Park, Glory Park Avenue, Wooburn

Green, Bucks, HP10 0DF. Tel 01628 537900. Fax 01628 526617.

PI Approval Code: UK/PRS/1507/0039(1). Date of revision: March 2016.

Adverse events should be reported. Reporting forms and information can be found at

www.mhra.gov.uk/yellowcard. Adverse events should also be reported to Takeda UK Ltd. Tel 01628 537900.

Vipidia® (alogliptin)

PRESCRIBING INFORMATION

Refer to summary of Product Characteristics (SmPC) before prescribing. Presentation: Alogliptin

6.25 mg, 12.5 mg and 25 mg film-coated tablets. Indication: Adults aged 18 years and older with Type 2

diabetes mellitus to improve glycaemic control in combination with other glucose lowering medicinal

products including insulin, when these, together with diet and exercise, do not provide adequate glycaemic

control. Dosage & Administration: In adults the usual recommended dose of Vipidia is one tablet of 25 mg

once daily (o.d.) with or without food. Elderly: No dose adjustment is necessary. Renal impairment: Mild

renal impairment, no dose adjustment is necessary. Moderate renal impairment 12.5 mg o.d. Severe renal

impairment or end-stage renal disease requiring dialysis 6.25 mg o.d. Experience in patients on dialysis is

limited. Vipidia has not been studied in patients undergoing peritoneal dialysis. Hepatic impairment: No

dose adjustment is necessary for patients with mild to moderate hepatic impairment. Has not been studied

in patients with severe hepatic impairment, therefore not recommended for use in these patients. Paediatric

population: No data are available. Contraindications: Hypersensitivity to the active substance or to its

excipients or history of a serious hypersensitivity reaction to any dipeptidyl-peptidase-4 (DPP-4) inhibitor.

Warnings & Precautions: General: Do not use in patients with Type 1 diabetes mellitus or for treatment of

diabetic ketoacidosis. Use with other antihyperglycaemic medicinal products and hypoglycaemia: When

used in combination with a sulphonylurea, insulin or combination therapy with thiazolidinedione plus

metformin, a lower dose of these medications may be considered to reduce the risk of hypoglycaemia.

Combinations not studied: Has not been studied in combination with sodium glucose cotransporter 2

(SGLT-2) inhibitors or glucagon like peptide 1 (GLP-1) analogues nor formally as triple therapy with

metformin and sulphonylurea. Renal impairment: Renal function assessment is recommended prior to

initiation of Vipidia therapy and periodically thereafter. Cardiac failure: Caution for use in patients with

congestive heart failure of New York Heart Association (NYHA) functional class III – IV due to limited

experience. Hypersensitivity reactions: Anaphylactic reactions , angioedema

and exfoliative skin conditions including Stevens-Johnson syndrome

and erythema multiforme have been observed for DPP-4 inhibitors and have been spontaneously reported

for alogliptin in the post-marketing setting. Acute pancreatitis: Use of DPP-4 inhibitors has been associated

with a risk of developing acute pancreatitis. Spontaneous reports of adverse reactions of acute pancreatitis

in the post-marketing setting. Patients should be informed of the characteristic symptoms of acute

pancreatitis. If pancreatitis is suspected, Vipidia should be discontinued; if acute pancreatitis is confirmed,

Vipidia should not be restarted. Caution should be exercised in patients with a history of pancreatitis.

Hepatic effects: Postmarketing reports of hepatic dysfunction, including failure, have been received. Patients

should be observed for possible liver abnormalities and liver function should be obtained promptly in patients

with any symptoms. Discontinue Vipidia treatment if an abnormality is found and an alternative aetiology is

not established. Interactions: Primarily excreted unchanged in the urine and metabolism by the cytochrome

(CYP) P450 system is negligible. Studies show no clinically relevant pharmacokinetic interactions. Fertility,

Pregnancy & Lactation: No data from use in pregnant women. Avoid use during pregnancy. Unknown

whether Vipidia is excreted in human milk, a risk to the suckling child cannot be excluded. Consider the risk-

benefit balance of use in breast-feeding mothers. The effect of Vipidia on fertility in humans has not been

studied. Undesirable Effects: Common (≥1/100 to <1/10): Upper respiratory tract infections;

nasopharyngitis; headache; abdominal pain; gastro-oesophageal reflux disease; pruritis; rash. Other serious

undesirable effects (frequency unknown): Acute pancreatitis; hepatic dysfunction including hepatic failure;

angioedema; hypersensitivity; exfoliative skin conditions. Refer to the SmPC for details on full side effect

profile and interactions. Basic NHS Price: £26.60 for 28 tablets Legal Classification: POM. Marketing

Authorisation: EU/1/13/844/009 6.25 mg; EU/1/13/844/018 12.5 mg; EU/1/13/844/027 25 mg. Takeda UK

Ltd. is responsible for the sale and supply of Vipidia in the UK. Further information is available from Takeda

UK Ltd, Building 3, Glory Park, Glory Park Avenue, Wooburn Green, Bucks, HP10 0DF. Tel 01628 537900.

Fax 01628 526617. PI Approval Code: UK/VIP/1604/0044 Date of revision: April 2016

Adverse events should be reported. Reporting forms and information can be found at www.mhra.gov.uk/yellowcard. Adverse events should also be reported to Takeda UK Ltd. Tel 01628 537900.

VIPIDIA is a registered trademark of Takeda Pharmaceutical Company Limited

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