Health Insurance (Pharmaceutical Benefit) (General Provisions) (No. 2) (Amendment No. 11) (Jersey) Order 2013

Information about the publication of Ministerial Decisions

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A decision made 23 August 2013:

Decision Reference: MD-S-2013-0078
Decision Summary Title:	DS - Health Insurance (Pharmaceutical Benefit) (General Provisions)(No 2) (Amendment No 11) (Jersey) Order 2013		Date of Decision Summary:	21 Aug 2013
Decision Summary Author:	Policy Principal		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	WR - Health Insurance (Pharmaceutical Benefit) (General Provisions) (No.2) (Amendment No.11) (Jersey) Order 2013		Date of Written Report:	21 Aug 2013
Written Report Author:	Policy Principal		Written Report : Public or Exempt?	Public
Subject: Health Insurance (Pharmaceutical Benefit) (General Provisions) (No.2) (Amendment No.11) (Jersey) Order 2013
Decision(s): The Minister made the Health Insurance (Pharmaceutical Benefit) (General Provisions) (No.2) (Amendment No.11) (Jersey) Order 2013
Reason(s) for Decision: The Health Insurance (Pharmaceutical Benefit) (General Provisions) (No.2) (Jersey) Order sets out the details in respect of the administration of pharmaceutical benefit, including the dispensing fee and the discount rates applicable to the total remuneration of pharmacists under the Health Insurance Law. A previous amendment to the Order created a two tier dispensing fee, with the first 50,000 items dispensed in any 12 month period attracting a higher dispensing fee. This amendment came into force mid-year, on 1 May 2013. For the 5 month period from 1 May 2013 to 30 September 2013, the item bar was reduced pro rata and the fee was set at £3.40 per item for the first 20,833 items. A commitment was given to increase the fee paid for tier-1 items (up to 50,000) with effect from October 1st in line with the Jersey RPI(Y) year to June 2013 and that this should take effect from 1 October 2013. The increase will bring the tier-1 dispensing fee from £3.40 to £3.45. The tier-2 fee will not be increased and remain at £3.13. Amendments have also been made to the discounting arrangements.
Resource Implications: There are no manpower implications in respect of this Order. The cost of the dispensing fees and the pharmaceutical benefit is met by the Health Insurance Fund. The additional cost in the coming year (running 1 Oct 2013 to 30 Sept 2014) to uprate tier-1 dispensing fees and increase the percentage of discount retained by the pharmacists is provisionally calculated at £139,800.
Action required: Policy Principal to notify the Greffe and the Law Draftsman that the Order has been made and to forward the signed and sealed Order to the States Greffe, requesting the Greffier of the States to arrange for the Order to be notified to the States.
Signature:		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Health Insurance (Pharmaceutical Benefit) (General Provisions) (No. 2) (Amendment No. 11) (Jersey) Order 2013

Social Security Department Ministerial Decision Report
Subject:	Health Insurance (Pharmaceutical Benefit) (General Provisions) (No.2) (Amendment No.11) (Jersey) Order 2013
Exempt: Clause:	Public	Date:	21 Aug 2013

Author:	Policy Principal, Social Security

Introduction

The Social Security Department provides a benefit from the Health Insurance Fund in respect of approved drugs prescribed by GPs and dispensed by community pharmacists. In addition to meeting the cost of the drug itself, the Department pays a dispensing fee for each prescription dispensed, and a formula is applied to the value of discount achieved by the pharmacist, to create the total remuneration package.

The Minister for Social Security is responsible for setting the discount rates and the dispensing fee paid to community pharmacists.

Dispensing fees were increased in 2010 and were uprated again in May 2013. At that time it was agreed that further uprates in dispensing fees would be delivered along with reductions in the percentage of discount recouped to the Fund.

Dispensing fee and discount values

Pharmacists are remunerated for the products they buy and dispense with reference to the Drug Tariff compiled and maintained under Regulation 18(1) of the National Health Service (Pharmaceutical Services) Regulations 1992 of the United Kingdom. In both the UK and Jersey pricing systems, it is recognised that pharmacies achieve a discount compared to the standard drug tariff prices, therefore a formula is applied to recoup a proportion of this discount. The discount formula is currently set to claw-back 20% and as of October 2013 this will reduce to 15%, enabling pharmacies to retain a larger proportion of any discount they achieve.

The proposed discount schedule is shown in the appendix alongside some historical data and further explanation.

Costs

Increase to dispensing fee

The tier-1 uprate will be made in respect the Jersey RPI(Y) year to June 2013. As shown below RPI(Y) increased by 1.4% during the 12 months to June 2013

	RPI(X)	RPI(Y)	RPI Pensioners	RPI Low Income
Jun-13	1.6	1.4	1.6	2.1

This increase will bring the tier-1 dispensing fee up to £3.45. The tier-2 fee (items over 50,000 will not be increased). If the number of items dispensed below the tier-1 bar is stable at approx 462,000, in the coming year (running 1st Oct 2013 to 30th Sept 2014) the additional budget required to fund the uprate in tier-1 dispensing fees would total £23,100 (an additional 5p per item).

Reduction in discount clawback

Across the 2012 calendar year the discount formula recouped £466,814. Increasing the amount of discount retained by pharmacies by 5% will increase costs to the fund by approximately £116,700

Resource Implications

There are no manpower implications in respect of this decision. The new discount scale and tier-1 tariff will be applied by NHS Business Services Authority. In total the uprate to the dispensing fee and reduction in the amount of discount recouped will increase costs to the Health Insurance Fund by approximately £139,800.