The Pharmaceutical Services Negotiating Committee (PSNC) has developed a new web tool to help community pharmacy contractors estimate the impact of the new discount deduction system on their payments.

The new discount deduction arrangements see the current single scale split into three groups: one each for generic medicines, branded medicines and appliances, each with separate fixed deduction rates. The changes will come into effect between October 2022 and January 2024.

Contractors can input information about their pharmacy dispensing mix across these three groups to receive an estimate for the impact of the new arrangements on the pharmacy’s payments.

Those who do not know their dispending mix data may be able to access it from their system supplier, or use the prescription item reports (PIR) available from the NHS Business Services Authority (NHSBSA), said PSNC, which provides guidance on the PIR on its website.

Under the current discount deduction arrangements, pharmacies with lower monthly reimbursement receive a lower rate of deduction and those with higher monthly reimbursement receive a higher rate.

However, under the new arrangements, this sloping scale has been removed. This means that every pharmacy will have the same rates of deduction applied to their reimbursement for the three different areas, regardless of the total value of that reimbursement.

PSNC said the changes follow a consultation on a proposal by the Department of Health and Social Care, which ‘was intended to recognise that brands do not typically attract the same level of discounts as generics, and that subsequently many brands were dispensed at a loss.’ This proposal was agreed by 70% of respondents.

Fin McCaul, PSNC committee member and independent contractor, said that the changes to discount deduction would ‘help to correct a system that has been wrong and unfair for a long time.’

He added: ‘PSNC and NHS England/DHSC analysis found that margins don’t grow with scale, so the move from a scale to flat rates is key. The change also corrects for brand and generic mix caused by local prescribing habits. It is also important to note that those generic medicines on price concession will no longer be subject to the same level of deduction as other generics.’