Don't bank on savings

Successful stewardship of NHS budgets requires an impressive array of skills and knowledge, plus an ability to take a long-term view of what is in the best interests of patients and the health service. Understanding some of the more technical aspects of the primary care prescribing budget is crucial for making sensible prescribing decisions. For example, two issues relating to generic prescribing have a key impact on budget management in the short and long term, and clinicians and commissioners ignore them at their peril.

The first relates to the pricing of generic drugs (i.e. those “to which the manufacturer does not apply a brand name that enables the product to be identified without reference to the generic title”).1 A mechanism known as ‘Category M’ drug pricing for certain generic drugs was introduced by the Department of Health in April 2005 when the new national contract for community pharmacy was launched. The price of Category M generic medicines is calculated taking into account the manufacturers’ prices, the volumes of the medicines sold, and the nationally agreed profit margin for community pharmacy.1 Reflecting these factors, the Drug Tariff prices for over 500 generic drugs listed in Category M are updated every quarter. Since its introduction, the overall impact of Category M drug pricing has been to reduce the amount spent on such drugs – a clear benefit. However, on the downside, the quarterly adjustment in prices can have a profound impact on expenditure on individual drugs. For example, over the last 12 months, the price of a 28-capsule pack of omeprazole 20mg has ranged from £1.68 to £2.56.2 With more than 18 million packs issued each year,3 this results in a change in expenditure of over £4 million per quarter for this drug alone in England. Such unpredictable …