Select Committee on Health Written Evidence

Memorandum submitted by the All Party Parliamentary Group on Primary Care and Public Health (CP 40)


  The prescription charge was first introduced in 1952, and apart from it being abolished for three years in 1965 the charge has increased over the years. Several organisations and politicians have called for a review of the prescription charge, especially the exemption criteria, but as far as the All Party Parliamentary Group on Primary Care and Public Health is aware, there has been no systematic evaluation of the scheme.

  In recent years the scheme has been criticised as being outdated with unacceptable inequities and anomalies and the All Party Parliamentary Group feel it is time to explore these criticisms.

  According to the NHS, the principles of the charges themselves are based on the fact that those who can afford to contribute should do so whilst those who are likely to have difficulty in paying should be protected. The Group wanted to look more deeply into this principle in order to gauge whether this is indeed working in practice and also if it can be sustained into the future.

  The Group sought written and oral evidence from a number of organisations including pharmacy bodies, PCTs, allied health professionals, think tanks as well as voluntary organisations and medical institutions.

  Written and oral evidence was received through addressing specific questions regarding the current prescription charge scheme:


From your perspective what are the rules and history of the scheme?

What are the criteria for exemption from the prescription charge?

Are you aware of a previous review and what the outcome of this was?


From the experience of clinicians, patients and pharmacists of the scheme in practice—what works and what does not work?

Do you have an assessment of the contribution the scheme makes to the NHS?

Do you know of the experience of other countries in Europe with regard prescription charges and co-payment and the lessons that may have emerged from this experience?


Can you tell us your views on the possible alternatives to the scheme taking account of the Wanless "fully engaged scenario" as described in the report to the Treasury, Securing our Future Health: Taking a Long-Term View, produced in 2002?


  The written and oral evidence provided by organisations (please see appendix 1 for details of those organisations who contributed)[9] to the specific questions asked of this inquiry by the All Party Parliamentary Group are noted:

(a)  From your perspective what are the rules and history of the scheme?

(b)  What are the criteria for exemption from the prescription charge?

(c)  Are you aware of a previous review and what the outcome of this was?

  (a)  Since the NHS was established in 1948 the principle has been to provide healthcare for all based on need not on the ability to pay except where regulations prove otherwise. Initially the prescription charge was introduced in 1952 based on a charge per form. In 1956 a charge per item was introduced. The charge was abolished in 1965 and reintroduced in 1968 due to a higher demand in prescriptions dispensed.

  A charge is payable for each prescribed item or quantity dispensed unless the patient is entitled to free prescriptions. Patients who require a lot of items or regular medication may buy a prescription prepayment certificate (PPC). The charge from 1 April 2005 is £6.50 per item, or a fee of £33.90 for a four month PPC and £93 for a 12 month PPC for an unlimited number of items.

  (b)  In 1968 the Government introduced exemption criteria which have never been reviewed. Entitlement to exemption is based on:

    —  the method of delivery, eg to an in-patient or supplied and administered by a GP;

    —  the type of medication, ie contraception or for the treatment of STI;

    —  the age of the patient;

    —  the patient's condition; or

    —  the patient's income.

  The current arrangements mean that around 50% of the population are exempt from prescription charges and in 2004 around 87% of prescription items dispensed in the community were free of charge. 8.4% were charged at the point of dispensing with another 4.7% of items going to PPC holders with no further charge paid at the point of dispensing.

  (c)  In 1998 the Comprehensive Spending Review (CSR) for 1999-2002 was published by HM Treasury. An internal review of prescription charges was undertaken as part of the formulation of government policy and this fed into the outcome of the CSR.

  As far as prescription charges were concerned, the then Secretary of State concluded that the charging arrangements should remain unchanged for the rest of the Parliament. No undertakings or commitments have been made since, however the House of Commons Health Select Committee is currently conducting an inquiry into "co-payments and charges in the NHS" with the last oral evidence session taking place on 16 February 2006.


(a)  From the experience of clinicians, patients and pharmacists of the scheme in practice—what works and what does not work?

(b)  Do you have an assessment of the contribution the scheme makes to the NHS?

(c)  Do you know of the experience of other countries in Europe with regard prescription charges and co-payment and the lessons that may have emerged from this experience?

  (a)  The prescription charge scheme (PSC) is seen by all respondents as unfair for the following reasons:

    —  it exempts some patient groups but not others; the list of medical conditions exempt from prescription charges has not been updated since 1968 and excludes several chronic conditions that have become prominent since then, such as cancer, multiple sclerosis, arthritis and HIV/AIDS; patient groups such as diabetics are exempt, but those suffering from cystic fibrosis, chronic asthma, hypertension and a variety of dermatological conditions are not;

    —  the blanket nature of some exemptions means that some people with high incomes are exempt while some people with low incomes are not exempt; for example, the PCS exempts anyone aged 65 and over and all pregnant women; and

    —  it presents a financial barrier to access to prescribed drugs for people with low incomes, particularly those whose earnings are just above the threshold for receipt of government benefits.

  In evidence from 2001 the National Association of Citizens Advice Bureaux and MORI showed that 28% of those who had paid prescription charges had failed to have all or part of the prescription dispensed because of the cost (38% of single parent households and 37% of those with long term problems). MORI estimated that around 750,000 people fail to get their prescriptions dispensed because of cost.

  The report identified a "poverty trap" in which patients just above the level of income support, for example those receiving incapacity benefit, get no help at all, and those with long term health problems were more likely to find charges difficult to afford, despite the season ticket scheme.

  Doctors, nurses and pharmacists have reported that patients ask if all the medicines prescribed are really necessary as they are unable to pay for them all. There are also patients who want large amounts of drugs dispensed to reduce the number of prescriptions. There are patients who are unable to pay for all the items on the prescription at once who seek several prescriptions (one for now, one for later). These scenarios can result in admission to secondary and acute services as well as an overall increase in morbidity.

  The availability of prescriptions for medicines that are legally classified as pharmacy only (P) and which are sold under the supervision of the pharmacist leads to a perverse situation in which those who are exempt from prescription charges will go to the GP simply to get OTC medicines on "free" prescription.

  Some people try to avoid having to pay prescription charges by going to an A & E department instead of seeing their GP.

  (b)  At present 87% of prescriptions are obtained free of charge. The prescription fee of £6.40 appears to represent good value for money since according to DH figures for 2004; the average net ingredient cost of a non-exempt item was £14.32.

  Income from prescriptions is estimated at £500 million per annum this is 40% of all income raised from NHS charges. While it only represents 1% of the cost of the NHS, it is nevertheless an additional contribution.

  (c)  In 2004 Lexchin and Grootendorst surveyed literature from a range of countries on "effects of prescription drugs users fees on drug and health service use and on health status of vulnerable populations." The literature concluded, "Virtually every article we reviewed supports the view that cost sharing through the use of co-payments (charges) or deductibles decreases the use of prescription medicines by the poor and the chronically ill."


  The medical care systems in France and the USA work to insurance-based systems, where patients generally pay the full cost of their medicines and are reimbursed for a proportion of the cost by their insurer, rather than paying a fixed prescription charge. An international review of studies found that, in the USA, limiting the level of reimbursement reduced the use of essential as well as non-essential medicines. The effect on vulnerable groups, such as patients with major psychiatric illness, was particularly marked and substantially increased costs in, for example, acute mental health services.

Czech Republic

  The Czech Republic has a public insurance system which provides 1/3 of all patients with drugs for a very small payment.

  For people with chronic illness or for emergency outpatients all drugs are free if generic or on a specific list which is updated by the government every six months.

  For expensive drugs there is a system of co-payment between the government and the patient. Doctors can prescribe from the list or in consultation with the patients, choose drugs more specific to their needs which will then require co-payment. Every pharmacy has a budget for certain drugs and different prices for co-payment.


  Ireland has a General Medical Services (GMS) scheme, which provides drugs free to approximately 30% of the population and a drug payment scheme for the rest of the population. If the total cost per month, per family, exceeds €85, all further drugs are free. The number of people who qualify for the GMS scheme has decreased and one of the key challenges is to find a way to help those on modest incomes who cannot receive free prescriptions, yet for whom the cost of the consultation and prescriptions threshold of €85 is too high.

  Under the GMS scheme, doctors are less concerned about the cost of the drugs prescribed; there is little incentive to keep costs within the budget as no penalties are incurred if they are exceeded. Patients can also discuss the choice of the cost of their prescription; for example, inhalers for asthma are available to patients on a sliding scale of €10 to €30.


  Prescription drugs in Poland are divided into three categories of price. The Ministry of Health has a special agency with responsibility for their allocation.

    (i)  Basic drugs, mainly generics and simple remedies. Patients pay a low standard fee, which is described precisely (ie number of tablets). If more expensive drugs are needed, then patients pay the difference.

    (ii)  50/50 government/patient payment, which also applies to the cheapest, generic drugs.

    (iii)  30%/70% government/patient—which applies to any drugs.


  Spain has a private system and a separate system for civil servants. Under the private system, the working population pays 40% of the cost of drugs. When they retire at 65, drugs are free.

  The civil servants pay 30% of the cost, but do not have free drugs after they retire at 60.

  There are specific drugs identified for chronic illnesses, for which patients pay a small amount.

  There are economic incentives for doctors to use a recommended list of drugs based on clinical effectiveness rather than opt for new, expensive drugs as a first choice.


Can you tell us your views on the possible alternatives to the scheme taking account of the Wanless "fully engaged scenario" as described in the report to the Treasury, Securing our Future Health: Taking a Long-Term View, produced in 2002?

  Taking into account the Wanless "fully engaged scenario" there is likely to be an increased demand for drugs as the population lives longer and has more time to develop chronic conditions, normally associated with older age, and there are more older people. Experience from the recently introduced Quality and Outcomes Framework in general practice shows that if you are going to manage conditions such as diabetes and heart disease effectively, there will be a need to use an increasing range of medicines. Although there is the possibility of improved lifestyles, including diet, smoking and exercise, lessening the incidence of chronic conditions, this is unlikely to stem the demand for drugs because at best, it will delay the onset of these conditions rather than prevent them.

Abolish the Prescription Charge Scheme

  If the objective is to improve efficiency by promoting more appropriate and cost-effective use of drugs and to reduce expenditure on pharmaceuticals, there appears to be no logic in applying a demand-side measure to a prescribed medicine. There is also no evidence to suggest that user charges are successful in controlling overall levels of health care expenditure. It would be more effective to introduce supply-side measures aimed at influencing the behaviour of prescribers (GPs) and suppliers (pharmacists).

  Abolishing the PCS would remove any financial barriers for those not currently exempt, thereby enhancing equity and bringing drug coverage in line with other NHS services (that is, free at the point of use). It was acknowledged that abolition may well drive more people into surgeries and increase GP workload which counters the current move towards health policies including individual responsibility and self-care.

Low level payment on all prescriptions

  This would see the removal of all exemptions and the introduction of a low level payment, for example a £1 payment that all patients would pay per prescription or item. This might mitigate against inappropriate use of the exemption status (ie: for OTC medicines) but be low enough to ensure that those on low incomes or on multiple medication could still afford it.

Change the rules governing the Prescription Charge Scheme

  Raising the income threshold for exemptions would enhance equity but result in revenue losses. It would still leave those whose incomes fell just above the exemption cut-off at a disadvantage.

  Updating the list of exempt conditions to take into account developments in drug technology would ensure that the system was more equitable for patients with different conditions. Ensuring that patients with chronic conditions have access to appropriate prescription drugs without financial barriers could have a positive impact on efficiency by reducing inappropriate utilisation of health services due to poor drug compliance. It would also result in a reduction in revenue.

Introduce a system of variable co-insurance based on cost-effectiveness

  Introducing a system of variable co-insurance based on cost-effectiveness aims to increase micro-efficiency. It may also contribute to controlling drug expenditure, as has happened in Italy and New Zealand.

  Unless combined with other measures such as an out-of-pocket maximum or exemptions for poorer people, a variable co-insurance system would negatively affect equity. Depending on how it is introduced, there might be significant costs of obtaining cost-effectiveness information and administrative costs.

  The following suggestions closely follow proposals set out by Walley (Walley 1998):

    —  abolish the flat-rate charge and introduce variable co-insurance rates based on the cost-effectiveness of different drugs (see Table 1 below);

    —  all drugs approved by the MHRA and available on the UK market would be assigned to one of the four categories in the variable co-insurance system set out below; the lists would need to be updated on a regular basis; most new drugs would be B or C initially, but a few might be A immediately;

    —  in the short term patients currently exempt might be entitled to B list drugs free of charge to give GPs time to adjust their prescribing behaviour and to allow time for evaluation of the reformed scheme; a reduced co-insurance rate for B list drugs might be considered in order to preserve equity for low-income households, although the use of means testing carries administrative costs and is inconsistent with the principle of universality; and

    —  protect low-income households and people with chronic conditions from excessive out-of-pocket costs by setting an annual out-of-pocket maximum; this would replace the pre-payment certificates, which currently cap prescription drug expenditure at £91.80 per year or three instalments of £33.40.

  Co-insurance rates and cost-effectiveness thresholds would need to be calculated on the basis of information about the value and volume of drugs consumed in each category, the willingness to pay and affordability of different co-insurance rates and the cost-effectiveness thresholds and recommendations of NICE.

Table 1


Co-insurance rate

A—  a selection of effective medicines
—  sufficiently comprehensive to allow treatment of all major conditions
B—  medicines either no more effective than A list medicines or offer minor benefits at a disproportionate cost?

—  might require a low co-payment, perhaps related to the cost of the prescription, to a pre-set maximum?

—  a maximum cumulative annual co-payment per patient should also be set?

—  GPs might be allowed to endorse a prescription for exceptional patients who would benefit more from the B list than the A list drug, but would have to justify this
C—  medicines for which effective alternatives are already listed; for example, branded preparations where a generic equivalent is available or which are largely directed at patient convenience, such as many modified release preparations

—  patients pay 50% of the cost of these medicines
D—  medicines not funded by the NHS at all (negative list)

Source: Walley 1998


  After careful consideration of the evidence provided by organisations the Group feels that it would be unrealistic to ask the Government to abolish prescription charges. However, with the current phasing out of prescription charges in Wales and the intention to eventually abolish prescription charges the outcome of which will be evaluated, the Group recommends that this is considered carefully by Government when the time is right. The Group noted that Scotland has considered the abolition of the prescription charge scheme and decided against it.

  There is clearly a balance to be struck between equity, fairness and dependency in and on the NHS. Supply-side restrictions cannot exist in isolation and demand-side controls need to be constructed more around incentives than the creation of barriers.

  At the very least the Group feels that the Government undertake an urgent review of the exemption criteria with advice on changes from doctor, nurse and pharmacist representatives.

  The Group also feel that the pre-payment certificate system should be reviewed since even the instalments of £33.40 can be difficult to pay for some people on lower income and yet it is just above the threshold for full exemption. The Group advises that a monthly payment structure should be considered with appropriate safeguards in place to avoid abuse of the system.

All Party Parliamentary Group Primary Care and Public Health

10 February 2006

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