Pharmacy Reimbursements
The typical process by which Community pharmacies obtain medicines can be summarised as follows: wholesalers purchase stock from manufacturers, which they sell to pharmacies who in turn supply it to patients. This could be in accordance with a prescription, a serious shortage protocol, a patient group direction or a pandemic treatment protocol. The pharmacy then claims reimbursement from the NHS for the product supplied. This is according to the arrangements set out in determinations by either the Secretary of State, Welsh ministers or NHS England which are published monthly in the Drug Tariff. The legal basis for these arrangements is set out in section 164 of the NHS Act 2006 and section 88 of the National Health Service (Wales) Act 2006. The Drug Tariff sets out a total payment package for the service provider that includes an amount that is referable to the cost of the product supplied and an amount that is referable to the service cost, for example doing the clinical check, advising the patient etc. Payments linked to the supply of products are termed reimbursement and in connection with service fees termed remuneration.
	The assumption is that even if the service provider received the product for free, they will be reimbursed something for dispensing it. This precludes an arrangement whereby the Government or NHS centrally procures products and then requires community pharmacies to source them from the central supplier at no cost to the community pharmacy. Regardless of the fact that the community pharmacy has paid nothing for the product, the scheme of the Act is such that there is an obligation for them to be reimbursed for it, unless there is a statutory exemption that applies, which is now being added to.
	We encounter problems with the system when not using a conventional supply chain, and this led to the unlicensed "specials" medicine amendments made to section 164 of the NHS Act 2006 and section 88 of the NHS (Wales) Act 2006 in 2017. Due to a lack of competition in the market for unlicensed medicines, and arrangements that meant that suppliers’ list prices were paid (a factor that has been partially dealt with in other ways), there was no incentive for pharmacy contractors to seek value for money. Therefore, the Government has included provisions to allow the Secretary of State or Welsh ministers to make regulations to the effect that pharmacy contractors do not need to be reimbursed for unlicensed "specials" medicines that are centrally supplied free of charge to them, for example by the NHS or DHSC.
	This provision seeks to add, in a limited way, further exemptions from the general obligation that community pharmacies needed to be reimbursed for the products supplied as part of pharmaceutical services in England and Wales, and as a corollary to that, to facilitate central purchasing. There are various reasons why the Department of Health and Social Care may now seek to centrally procure vaccines, immunisations or products used to treat a pandemic. For example, in a global health emergency, when pressures from global demand mean that central purchasing and direct supply to community pharmacies are critical to maintain continuity of supply for UK patients in England or Wales, Ministers may wish to use central procurement without the risks of wholesalers increasing prices or exporting the stock. The Government wishes to have the option to be able to supply the product "directly" free of charge to pharmacies, without needing to sell into the supply chain in order to allow the ordinary reimbursement arrangements to function. In these circumstances, the Department would not want to reimburse pharmacies as well as purchasing the stock, otherwise the Government would be paying twice for the product.
	The additions made by the provision are restricted to vaccinations and immunisations, medicinal products used for the prevention or treatment of disease in a pandemic, and associated products such as diluents and syringes. This provision aims to strengthen the legal basis for these central purchasing scenarios while aiming to not radically change established NHS pharmaceutical service provision or payment mechanisms.