Home General News
Cost of Service Inquiry update
The funding arrangements for NHS Community Pharmacy Services in England, which were changed in April 2005, were informed by a survey of pharmacy’s costs undertaken in 2003. The Pharmaceutical Services Negotiating Committee (PSNC) and the Department of Health have agreed that it is now necessary to undertake a new joint cost of service inquiry.
The joint cost of service inquiry will form the evidence base for negotiations for future funding. It is essential that the costs of the range of pharmacy businesses today are captured fully, as well as identifying the costs of future developments in the community pharmacy service.
PricewaterhouseCoopers (PwC) has been appointed by the Department of Health and PSNC to conduct the inquiry, which is expected to report in April 2010. So far the inquiry is progressing well and to schedule. A pilot survey has been completed to inform the full survey, which will start in January. PwC will shortly be writing to a number of pharmacy contractors to seek their participation in the full survey.
A sample of pharmacies will be surveyed from across the country. The survey will include a questionnaire and a telephone conversation to take contractors through each of the questions. The questions will focus on the costs of conducting the business, but in addition will seek information about the pharmacy, such as additional services provided and staffing structure. Contractors will also be asked to submit a copy of their latest financial accounts.
In previous inquiries, pharmacy contractors have voluntarily supported the inquiry, providing the Department of Health and the PSNC with the requested information to complete the survey. However, if securing support from the required number of pharmacies is not successful, the Secretary of State for Health has powers, under the pharmacy regulations, to require pharmacists to provide the information. It is hoped these powers will not be needed.
Further Information
The contractual framework introduced in April 2005 provides the basis for improving the quality and range of services provided through community pharmacies. However, since its introduction, the role of pharmacy has changed considerably by the addition of services and the opening of different types of pharmacy to meet the needs of a changing client base.
During the 2008/09 community pharmacy contractual framework funding the PSNC stated that over recent years, as surplus profit margin has been identified and removed, funding has become insufficient to support pharmacy contractors, to make investment in new, clinically-based services. The Department of Health agreed to undertake a full cost of service inquiry, to not only identify the current cost, but also to ascertain the future cost of providing the developing pharmaceutical services in England.
The last inquiry was carried out in 2003 and helped to inform funding for the new community pharmacy contractual framework, introduced in 2005. The new inquiry will inform the future funding base for the contractual framework, with the expectation, as set out in the pharmacy White Paper, that future funding arrangements will reward those that invest in the delivery of efficient and high quality services.
In April 2009, a steering group was formed to provide pharmacy policy and practice, analytical, academic and finance expertise, to support the development and progress of the inquiry. It comprises representatives of both DH and PSNC, each of whom have invited external experts to participate, as well as members from both HM Treasury and NHS Employers.
The steering group membership is listed below:
Mr Peter Cattee Community Pharmacist and PSNC committee member
Ms Claire Darlington HM Treasury
Mr Mike Dent Head of Finance, PSNC
Ms Susan Grieve Principal Pharmacist, Department of Health
Mr Edward Jewell Finance Department, Department of Health
Mrs Jeannette Howe Head of Pharmacy, Department of Health (SRO)
Dr Pedro Luis do Nascimento Silva Southampton Statistical Sciences Research Institute, University of Southampton
Ms Dawn O'Neill Department of Health
Mr Danny Palnoch Head of Medicines Analysis, Department of Health
Mr Raj Patel Community Pharmacist and PSNC committee member
Prof Paul Robson University of Kingston
Mrs Sue Sharpe CEO, PSNC
Mr Mark Wilson NHS Employers
Prof George Yarrow The Regulatory Policy Institute
The key responsibilities of the steering group include to:
- Guide the development and overall direction of the inquiry;
- Ensure that the activities and aims of the inquiry remain aligned with Department of Health policy for the development of pharmacy services;
- Ensure the inquiry is on track to fulfil its objectives and milestones are met;
- Monitor the progress of the inquiry against timescales, agreed budget and manage risk;
- Ensure the inquiry adopts appropriate robust controls to provide value of money and ensures the inquiry is delivered within budget;
- Reassess priorities for the inquiry in light of developments and changing circumstances;
- Ensure that there is a mechanism available to monitor the benefits achieved on completion of the Inquiry.
Following an extensive procurement exercise, PricewaterhouseCoopers LLP (PwC) was appointed in October 2009 to support the cost of service inquiry.
The Department of Health, PwC and PSNC acknowledge the commercial sensitivity of the information and have all committed to:
- confine access strictly to people who need to see it for the purposes of the inquiry. Only PwC will have information relating to named contractors, all other access will be to anonymised data;
- ensure that the information will not be used for any purpose other than this inquiry;
- destroy the information disclosing the identity of the contractors whose data are analysed as soon as the database has been quality assured and agreed between the PSNC and DH;
- maintain the confidentiality of an individual contractor’s information in response to any requests for access to the database or any of its contents under the Freedom of Information Act;
- treat the identity of contractors from whom details are sought as confidential information.
Posted 15 January 2010