90.Section 4 inserts a new Schedule 12A in the 1977 Act, which revises the definitions of Health Authorities’ “main expenditure” (which is cash-limited) and “general Part II expenditure” (which is not cash-limited) and introduces comparable definitions for Primary Care Trusts. The main purpose of the changes is to allow the drugs costs of prescriptions written by GPs or nurses to be treated as part of the “main expenditure” of the Health Authority or Primary Care Trust where the prescription is written rather than of the Health Authority where the prescription is dispensed.
91.The situation at present is that responsibility for paying remuneration to chemists and GPs in respect of drugs dispensed to NHS patients belongs to the Health Authority in whose area the dispensing service is provided. Prior to amendment by the Act, section 97(3A)(b) of the 1977 Act allows the costs of reimbursing the expenses incurred in supplying the dispensed drugs to be designated as part of the cash-limited “main expenditure” of the Health Authority making the payment.
92.The main change arising from the new Schedule 12A (paragraphs 1 to 3) is that Health Authorities will be accountable for the drugs costs which are apportioned to them by the Secretary of State. The costs for which each Health Authority is accountable is will be included in the Authority’s cash-limited “main expenditure”. The power to apportion (paragraph 3) will primarily be exercised so as to provide that Health Authorities will be accountable for the drugs costs arising from the prescriptions written by GPs and nurses in their area, even where those drugs are dispensed in the area of another Authority.
93.Dispensing fees will remain part of “general Part II expenditure”.
94.The power to apportion payments for drugs among Health Authorities, other than on the basis of where the drugs are dispensed, will also enable those elements of the payments that are extraneous to the prescribing decision (e.g. the assumed level of discount obtained by the chemist or GP) to be averaged out amongst Health Authorities (see paragraph 3(4)(b)).
95.Responsibility for making payments to chemists and GPs will remain with the Health Authority in whose area the dispensing service is provided. Where some element of these payments, the other Health Authority will have to be treated as if they had themselves made the payment (paragraph 3(3)). The Health Authority actually making the payments will, however, still need to be reimbursed in some way for the costs involved (paragraph 3(5)). The system that will operate in England is that the Prescription Pricing Authority (for chemists) and Health Authorities (for GPs) will draw down from a central account the funds needed to make all payments for drugs, whichever Health Authority is to be accountable for the payments. The Department of Health will then re-charge these payments to Health Authorities’ cash-limited budgets according to the apportionment made under paragraph 3(1). In Wales, Health Authorities will continue to be directly responsible for paying their chemists and GPs from their cash-limited budgets. These arrangements may be reviewed by the National Assembly for Wales.
96.In the case of drugs ordered by hospital practitioners but dispensed by community pharmacies, NHS Trusts (as now) and Primary Care Trusts may be required to reimburse Health Authorities for the full amount of the remuneration paid to the chemist, i.e. both in relation to the drugs dispensed and the associated professional fees. Paragraph 7(3) enables both these elements of remuneration to be taken into account in re-charging costs to Health Authorities. Section 4(3) amends section 103(3) of the 1977 Act in such a way that the Secretary of State will be able to arrange for a NHS Trust or Primary Care Trust to re-pay such costs to the same Health Authority in each case (rather than necessarily the Health Authority which made the corresponding payment to the chemist). The Health Authority to which these payments are apportioned will be the Health Authority to which the repayment is due.
97.The definitions of Primary Care Trusts’ “general Part II expenditure” and “main expenditure” (paragraphs 4 and 5 of new Schedule 12A) mirror as closely as possible the definitions for Health Authorities.
98.Paragraph 6 allows Health Authorities to apportion the drugs payments for which they are accountable (under paragraph 3) among their Primary Care Trusts, such that these apportioned payments are treated as part of the Primary Care Trust’s “main expenditure”. This will enable Health Authorities to charge to Primary Care Trusts’ cash-limited budgets the costs of prescriptions written by GPs and nurses for which that Primary Care Trust is responsible.
99.Health Authorities will be accountable for payments on the revised basis from 1999/2000 (section 4(4)).
Commentary on Sections Part I - the National Health Service Section 4: Expenditure of Health Authorities and Primary Care Trusts