MEMORANDUM BY THE PRESCRIPTION PRICING
AUTHORITY (GD9)
AVAILABILITY OF GENERIC DRUGS TO THE NHS
1. PRESCRIPTION
PRICING AUTHORITY
(PPA)—BACKGROUND
1.1 The PPA is a Special Health Authority
that undertakes a range of functions as directed by the Secretary
of State for Health. These main functions are:
— Pricing of NHS prescriptions for
drugs and appliances.
— Making payments to dispensing contractors.
— The provision of information on prescribing
trends and drug usage and the publication of the drug tariff.
— Investigation of potential prescription
fraud by patients and contractors.
— The management of the NHS Low Income
Scheme.
1.2 The PPA currently employs 2,018 staff
at 10 prescription processing divisions across the North of England
and at its Headquarters in Newcastle-upon-Tyne.
1.3 In 1998-99 the PPA processed 531 million
prescriptions and authorised £5 billion for payment to contractors.
During 1998-99 all key service targets, detailed in a comprehensive
Service Level Agreement between the PPA and the Department of
Health, were met.
2. NORMAL BUSINESS
CYCLE—AN
OVERVIEW
2.1 Prescriptions dispensed in a particular
month are sent to the PPA by the contractor at the end of that
month. Prescriptions are normally processed by PPA staff throughout
the following month. Prescription processing activity is a high
speed, interpretative data capture function, requiring high standards
of productivity and accuracy to be met to ensure payments made
and information provided are accurate and timely.
2.2 Prescription data is entered onto PPA
computer systems. For each dispensed PPA processing staff enter
a drug code, quantity dispensed and prescribing unit identifier.
The systems are designed around the principle that staff will
remember the codes for commonly dispensed items. Commonly dispensed
drugs are allocated short codes of between 2-5 digits with the
most frequently prescribed drugs having the shortest code.
2.3 When generic drugs are in normal supply
they will be entered into the computer systems with these short
codes that link to the drug tariff price (a single price determined
from the prices of a number of suppliers) for that drug. In these
circumstances any endorsement (information added to the prescription
by the dispenser to assist the PPA in making an appropriate payment)
by the pharmacist would be ignored.
2.4 A range of validation checks take place
within these computer systems, prior to pricing and calculation
of the payments due to contractors. These payments would normally
consist of an 80 per cent advance payment and a balancing payment
from the previous month.
2.5 The processed data is used to construct
a range of prescribing trends and cost reports for use across
the NHS. The two of the most significance to Health Authority
and Primary Care Group colleagues are:
— Prescribing Monitoring Documents
(PMD)—for GPs, PCGs and HAs. Monthly paper report providing
prescribing costs against budgets.
— Electronic Prescribing Analyses and
Cost (EPACT and EPACT.net)—for GP practices (pilot system),
PCGs and HAs. Electronic systems (computer to computer over a
network and the internet) updated monthly. PACT is used to performance
manage prescribing, set and monitor incentive schemes, monitor
expenditure against prescribing budgets and forecast expenditure
to year end.
Normally these products are sent out or are
available within three days of the conclusion of the monthly prescription
processing cycle.
3. CATEGORY D
3.1 Drugs are placed in category D (within
part 8 of the Drug Tariff) when there is a problem with their
availability.
3.2 The arrangements for entry (and exit)
of a drug into Category D are agreed between the Department of
Health and the Pharmaceutical Services Negotiating Committee (PSNC)
and are administered by the PPA.
3.3 Volumes of prescriptions for Category
D items have traditionally been very low, normally around 1 per
cent of prescriptions received. Historical records show that normally
30-40 drugs are listed in this category and that only a small
number of them were commonly prescribed.
3.4 In March 1999, whilst processing February
1999 prescriptions, the PPA first noticed that the number of products
listed as Category D and the volume of prescriptions for category
D items was starting to rise significantly.
3.5 The current position (October 1999)
is that 192 products are listed in Category D and the volume of
prescriptions for Category D items is approximately 15 per cent
of the total received.
4. THE IMPACT
OF THE
INCREASE IN
CATEGORY D VOLUMES
ON PRESCRIPTION
PROCESSING
4.1 A Category D prescription takes between
three and four times as long for staff to process as a non-category
D prescription.
4.2 Once drugs are listed in category D
the pharmacist will generally endorse the prescription with the
name of the supplier from whom he has procured the drug as under
the reimbursement rules the PPA is obliged to reimburse the pharmacist
at the specific suppliers list price.
4.3 A category D item endorsed with the
supplier will have a code entered onto the PPA`s computer systems,
which identifies the supplier`s version so that their list price
is paid. As these codes are rarely used in normal processing they
cannot be allocated short codes. The processing staff are therefore
required to key a nine digit code (rather than the normal 2-5
digit code) that is different for each supplier and pack size.
For example say 10 manufacturers or wholesalers supply a particular
drug and produce it in three different pack sizes. The result
is that any one of 30 different nine digit codes needs to be entered
rather than the one short code normally used for this product.
4.4 In addition these codes are not available
on the quick reference charts normally used by processing staff
and because they cannot be remembered they have to be looked up
on new specially created reference documents.
4.5 The net result is that the increase
in volume of category D prescriptions from their traditional low
level to 15 per cent allied to an increasing tendency for pharmacists
to endorse non category D prescriptions has led to a significant
drop in productivity on prescription processing.
4.6 The current position is that one month's
prescriptions are taking six weeks to process compared with the
normal processing time of four weeks.
5. THE IMPACT
OF THE
INCREASE ON
CATEGORY D PRESCRIPTIONS
ON PPA SERVICES
TO STAKEHOLDERS.
5.1 The delays to the prescription processing
service caused by the category D problem have had the following
consequences on PPA services to stakeholders:
— The normal payment arrangements for
contractors have been superseded by interim advance payments.
The first interim advance was paid on 1 September 1999. This arrangement
ensures contractors do not experience cash flow problems as a
result of the delay to processing.
— The provision of information on prescribing
trends and costs to NHS stakeholders has been delayed. Information
provision is currently six weeks behind normal schedule.
5.2 The advance payment to pharmacists is
now calculated on the contractors declared number of prescriptions
multiplied by the latest available monthly average cost per prescription
for that contractor. The average cost per item is adjusted upward
by a factor of 1 per cent for each months delay. For example,
if the advance payment for September prescriptions is based on
the August average, the advance is made at 101 per cent of that
figure. If the advance is based on the July average, the adjustment
is 102 per cent.
5.3 If category D levels remain unchanged
it is forecast that information relating to October dispensed
prescriptions cannot be provided until the end of March 2000.
Normally information up to and including January dispensed prescriptions
would be available at that point. This means that at the end of
this financial year seven months real data instead of the usual
10 will be available.
6. THE STEPS
THE PPA HAS
ALREADY TAKEN
6.1 Initially we took the view that the
additional workload could be managed using existing staff working
longer hours on overtime with changes we implemented to operational
procedures to streamline the processing of category D prescriptions.
We formed this view on the basis that:
— The NHS was unable to predict at
the time that the volume of commonly prescribed category D drugs
would continue to rise (the current situation is unprecedented)
and,
— There was an expectation that the
market would correct itself by other suppliers increasing supply
of category D products.
The shorgage of supply was therefore thought
to be a temporary problem, was likely to be contained by the steps
we had taken, and no additional action was considered appropriate.
6.2 However the volume of category D prescriptions
has risen steadily since March 1999 and now appears to have plateaued
at around 15 per cent.
6.3 Since March 1999 we have provided regular
reports to colleagues in the Department of Health to assist officials
to understand the nature, scope, recovery cost and likely future
impact of the category D problem on the PPAs prescription processing
service and the payment and information services provided by the
PPA to stakeholders.
In addition we have:
— Continued to work substantial overtime—31
million prescriptions have been processed in overtime since March
1999 in over 140,000 overtime hours.
— Recruited staff to deal with the
category D problem and to replace leavers—the number of
processing staff recruited to date in 1999 is 230.
— Regularly communicated the impact
of the category D problem on our payments and information services
to our pharmacist and NHS stakeholders.
— Developed and implemented an Interim
Payments System to ensure dispensing contractors receive a payment
each month.
— Developed changes to the pricing
system to ensure it can deal with prescriptions from two dispensing
months in any calendar month.
— Developed and are rolling out changes
to our data entry systems to speed up the process to entering
category D prescriptions—this it is estimated will improve
productivity by 7 per cent one month post full implementation.
6.4 With category D volumes appearing to
have stabilised at around 15 per cent we have recognised that
the steps we have taken to date will not in themselves allow us
to process a months prescriptions within a month, process the
current backlog and put our payments and information services
back to normal schedule.
6.5 Although the Department of Health are
proposing some changes to the rules surrounding products entry
into and exit from category D, in our view, these proposals will
not on their own bring the volume of category D prescriptions
down to near historical levels.
6.6 In parallel with the actions we have
taken as detailed in paragraph 6.3, the PPA has also been actively
involved in a project set up by the Department of Health to develop
an appropriate business model for Electronic Data Interchange
(EDI) between prescribers, dispensers and the PPA. It is envisaged
that if this initiative were to be implemented allied to a programme
of re-engineering of the PPA computer systems (to accept electronic
messages and automatically validate prescription data to agreed
rules) then the impact of high volumes of category D prescriptions
on processing time-scales would be negligible. However this is
not a short term solution to the current problem and this strand
of the Information for Health strategy would require significant
funding from the Department of Health.
7. THE STEPS
THAT THE
PPA NOW PROPOSES
TO TAKE
7.1 We have already commenced discussions
with officials from the Department of Health on a number of possible
scenarios for dealing with the situation. We intend to take the
following actions:
— Recruit and train 154 additional
processing staff to infrastructure capacity (1,446 staff—establishment
currently 1,292).
— Consider implementing shift working
in order to maximise the number of staff to available computer
terminals and buildings.
— Consider whether further changes
to our complex computer systems can be made to further speed up
category D prescription data entry.
7.2 In addition to the actions we have already
taken these steps will, if category D prescription intake remains
at around current levels, eventually enable services to return
to normal timeframes. However, because the additional steps have
significant implement lead-in times, recovery to normal timeframes
will be a slow process and this is unlikely to be acceptable to
the service.
7.3 In the light of this we have commenced
discussions with officials from the Department of Health on whether
the backlog of prescriptions (at current category D levels—growing
by two weeks every month) should be set aside to enable the PPA
to make a "fresh start" on the latest months prescriptions.
7.4 However in view of implementaiton lead-in
times already referred to above and assuming category D levels
remain as current this will not mean an immediate return to processing
a months prescriptions within a month. It would however mean the
timeframe to return to normal service levels would be considerably
shortened.
7.5 If the backlog were to be set aside,
three approaches for dealing with it are thought to warrant policy
consideration. They are:
— Not process the backlog of prescriptions
at all. This would mean relying on interim payments with no reconciliation
to actuals (our view is that this is unlikely to be acceptable
to contractors or NHS auditors) and the loss of prescribing data
for the months concerned.
— Process backlog over time when capacity
allows. This would be a very slow process.
— Process statistically valid sample
of prescriptions to provide an assurance that any adjustment to
the interim payments made to contractors was appropriate. With
this option the attribution of dispensing data to prescribing
budget holder unit would be lost.
We are developing a sophisticated model to assess
these decision options and will be discussing these with officials
from the Department of Health in early course.
8. CONCLUSIONS
8.1 If the volume of category D items remains
at current levels then is already apparent is that planned recruitment
to maximum capacity and the introduction of shift work are essential
to enable recovery. The PPA is pressing ahead with these strands
of the recovery plan and will secure the additional funding required
for these steps from the Department of Health.
8.2 In the meantime we will continue to
work towards and support the Department of Health's efforts to
develop and implement Electronic Data Interchange (EDI) between
prescribers, dispensers and the PPA.
November 1999
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