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MODERNISING NHS COMMUNITY PHARMACY IN SCOTLAND

SECTION 1: LEGISLATIVE BACKGROUND AND GENERAL OVERVIEW

Introduction

1.1 The purpose of this section is to provide a brief overview of the legislative framework within which pharmaceutical services are currently secured and provided. Where appropriate, subsequent sections refer to this section or, where necessary, expand on the summary detail below.

Summary Overview

1.2 Under the terms of National Health Service (Scotland) Act 1978 ("the 1978 Act") , NHS Boards ("Boards") are required¹ to make and administer arrangements for the provision of pharmaceutical services to people in their area. Pharmaceutical services consist primarily of dispensing the drugs and appliances prescribed by doctors and other health professionals. Arrangements for the provision of these services are normally made with community pharmacies and, to a lesser extent, appliance suppliers. Boards may also arrange for general medical practitioners (GPs) to provide dispensing services to their patients where there is no ready access to a community pharmacy. However, except where explicitly stated, the proposals in this consultation paper do not extend to dispensing doctors.

1.3 The arrangements made by Boards with community pharmacists and appliance suppliers must comply with regulations made under the 1978 Act . Those regulations (the National Health Service (Pharmaceutical Services)(Scotland) Regulations 1995² - "the 1995 Regulations") govern the selection of persons to provide pharmaceutical services and set out the terms and conditions under which those services will be provided.

1.4 There is no formal ‘contract’ as such between the Board and a person or business providing pharmaceutical services in its area. The role of the Board in whose area the pharmacy is located is to administer the framework set up by the 1978 Act and regulations. Nevertheless, pharmaceutical service providers are generally referred to as ‘pharmacy contractors’, which for the purposes of this document includes appliance suppliers, and the services are said to be delivered through the ‘community pharmacy contract’.

1.5 Community pharmacists and appliance suppliers with whom a Board has arranged for the provision of pharmaceutical services are included in the Board’s "pharmaceutical list". An application for inclusion in the pharmaceutical list is, therefore, essentially an application to provide pharmaceutical services in the relevant Board’s area. The procedure for consideration of applications is also set out in the 1995 Regulations and explained in more detail at paragraphs 1.13 to 1.15.

1.6 Although NHS Boards are responsible for arranging the provision of pharmaceutical services in their area, the community pharmacy contract under which they are delivered comprises both centrally and locally negotiated services. Consultations for the former (national contract items) are conducted between the Scottish Executive Health Department (SEHD) and the body acknowledged to represent the general body of community pharmacists in Scotland, namely the Scottish Pharmaceutical General Council (SPGC).

1.7 The fees and allowances payable to pharmacy contractors for centrally negotiated services, and amounts they are reimbursed for certain dispensed items, are recorded in the Scottish Drug Tariff³.

Present Definition of pharmaceutical services

1.8 In terms of section 27 the of the 1978 Act ‘pharmaceutical services’ comprise:

• Dispensing Services, i.e. the provision of proper and sufficient drugs and medicines and listed appliances⁴ ordered by a duly authorised health practitioner. This is a national contract item.
• Additional professional services, i.e. services prescribed by Ministers⁵. These are national contract items and detailed at regulation 4 of the 1995 Regulations and in the Scottish Drug Tariff. Currently, these services cover a range of requirements linked to the payment of a professional allowance (but not to appliance suppliers). In summary the pharmacy contractors must:
• Set aside areas for displaying health education material
• Provide advice and counselling to the public on medicines and appliances
• Arrange the keeping of records of medicines supplied to NHS patients
• Undertake clinical audit within NHSScotland structures
• Produce a practice leaflet giving customer advice on NHS services offered
• Additional Pharmaceutical Services – dispensing and advisory services subject to local NHS Board negotiation. These are local contract items covering services that Ministers have directed⁶ NHS Boards to negotiate, and which are listed in the Scottish Drug Tariff⁷. These are generally referred to as ‘directed services’ and at present comprise:
• Advisory Services to Residential Homes
• Methadone Dispensing Services
• Oxygen Supply Services
• Needle Exchange Schemes
• Disposal of Pharmaceutical Waste
• Out of Hours Services
• Collection and Delivery Services

1.9 Where the directed service is provided by a pharmacist, it must be a pharmacist on the pharmaceutical list. Some of these directed services can, however, be provided by other organisations, e.g. needle exchange, disposal of waste.

Persons who may provide pharmaceutical services

1.10 The 1978 Act⁸ sets out the persons with whom a NHS Board may arrange the provision of pharmaceutical services. Generally, arrangements may only be made with a registered pharmacist, or a person lawfully conducting a retail pharmacy business in accordance with the Medicines Act 1968⁹, who undertakes that medicines will be dispensed by, or under the direct supervision of, a registered pharmacist. Additionally, Boards are authorised to make arrangements with a supplier of appliances for pharmaceutical services by way of the provision of appliances.

Regulations

1.11 The 1978 Act enables¹⁰ Scottish Ministers to make regulations governing the provision of pharmaceutical services. As mentioned above, those regulations are the National Health Service (Pharmaceutical Services) (Scotland) Regulations 1995 ("the 1995 Regulations")¹¹. The 1995 Regulations set out, amongst other things, the "terms of service"¹² for pharmacy contractors. They require pharmacy contractors to dispense, with reasonable promptness, every prescription for drugs or medicines which they are presented with as well as covering a range of other service delivery issues. Such issues include, for example, premises and hours of business, handling of complaints, the application of professional standards and the circumstances in which a pharmacy contractor may withdraw their name, or be removed, from a pharmaceutical list.

1.12 For the purposes of the 1995 Regulations "pharmaceutical services" apply only to dispensing and additional professional services (see paragraph 1.8) and excludes ‘directed services’¹³. However, a pharmacy contractor with whom a Board arranges the provision of any directed service is required to comply¹⁴ with the terms and conditions of the arrangement, as set by the Board.

Inclusion in pharmaceutical lists

1.13 The 1995 Regulations also require¹⁵ Boards to prepare lists of the persons with whom they have made arrangements for the provision of pharmaceutical services. Separate lists are to be prepared in respect of persons who undertake to provide drugs and those who undertake to provide appliances.

1.14 The 1995 Regulations detail how an application for inclusion in a pharmaceutical list is to be made. In most cases ‘control of entry rules’ apply, and an application may only be granted if the local Pharmacy Practices Committee, acting on behalf of the Board, is satisfied that it is "necessary or desirable"¹⁶ to do so in order to secure the adequate provision of pharmaceutical services in the neighbourhood in which the premises in question are located¹⁷. Cases of minor relocation, or where a new provider applies to take over existing arrangements for the provision of services, are excepted from the control of entry rules¹⁸.

1.15 On receipt of an application to which the control of entry rules apply, the Board must notify relevant local committees and persons already included in a pharmaceutical list whose interests might be affected if the application were granted¹⁹. The persons notified are entitled to make representations to the Board and thereafter must be given notice of the Board’s decision. Such persons and the applicant are entitled to appeal against the decision. Such appeals are determined by an independent National Appeals Panel.

Funding

1.16 Remuneration for pharmacy contractors comprises two elements, i.e. fees and allowances for service provision, and reimbursement for the cost of NHS drugs/appliances dispensed. The fees and allowances payable for dispensing and other services are paid by the Board on whose list the contractor is included. Payments in respect of locally negotiated services are funded from Boards’ cash limited allocations, generally referred to as ‘unified budgets’. Payments to community pharmacy contractors for nationally negotiated services are funded from a centrally held ‘global sum’ with Boards drawing down the amounts they require on a monthly basis.

1.17 The ‘global sum’ is determined annually through consultations between the Health Department and the Scottish Pharmaceutical General Council. In effect it is a capped sum with any over or under payment in any one year being accounted for in the subsequent year’s discussions and by appropriate adjustments to the fees and allowances scales.

1.18 The costs of drugs that the pharmacists dispense for the NHS are reimbursed by the Board with responsibility for the prescriber concerned. Items for NHS dispensing are first purchased by community pharmacists who are subsequently reimbursed according to prices in the Scottish Drug Tariff for generic medicines (previously proprietary medicines but now off-patent) and listed appliances, or on manufacturers’ price lists for proprietary items. In both cases the reimbursement arrangements are covered by protocols agreed between the Health Department and the Scottish Pharmaceutical General Council. The protocols provide for the recovery of discounts that community pharmacists can obtain from wholesalers under volume purchasing and other market deals.

1.19 Whilst Boards are accountable for the payments made to community pharmacists the function of calculating and paying the amounts due is undertaken by the Common Services Agency on Boards’ behalf.

Conclusion

1.20 To put the above into some context, there are currently around 1,150 pharmacy contractors in Scotland who will dispense something in the region of 70 million items against NHS prescriptions per annum. It is expected that the cost of providing pharmaceutical services in 2003-04 will be in the region of £920 million, comprising:

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