Home Category M
Category M was introduced into the Drug Tariff in April 2005 when the new community pharmacy contract was launched. Key points about the system:
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Category M is used to adjust the reimbursement prices of over 500 medicines.
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It uses information gathered from manufacturers on volumes and prices of products sold plus information from the NHSBSA Prescription Services on dispensing volumes to calculate margins in the supply chain.
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It is normally adjusted on a quarterly cycle in light of this information and negotiations with PSNC.
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As prices have to be set in advance each quarter, estimated volumes are used which may differ from actual volumes. However, the built in correction mechanism ensures that the quarterly adjustments account for any over or under recovery in practice.
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It is closely monitored by PSNC to ensure that the scheme operates correctly and to identify anomalies. Regular feedback meetings are held with the DH.
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It is the principal price adjustment mechanism to ensure delivery of the purchase profit income promised as part of the new pharmacy contract.
PSNC puts considerable resources into monitoring all elements of funding, including Category M.
One problem that can arise is products not being available to purchase at the Category M reimbursement price. The Department of Health sets Category M prices at levels substantially above the prices notified by manufacturers. But when the Category M reimbursement price for a particular product falls, it may take time, and sustained pressure from pharmacies, for wholesale prices to respond. During this period, it is essential that contractors exert maximum pressure on wholesalers. There have been a number of examples where manufacturers prices were below the Drug Tariff price but a product could not be obtained at the Drug Tariff price from a number of wholesalers.
In some parts of the country, another problem is branded prescribing. As Category M prices are set to include an element of purchase profit, a fundamental part of the new contract funding arrangements, reimbursement prices may be higher than manufacturer’s list prices. To save money, some PCTs are encouraging branded prescribing. When products are prescribed generically, pharmacies seek to obtain the best available generics prices, driving down the prices being charged by wholesalers and manufacturers and in turn the Drug Tariff reimbursement prices and costs for the NHS. Prescribing branded generics or off-patent branded medicines profoundly affects the competition that drives down prices in the generics market and acts to drive up costs to the NHS. It can also lead to unequal geographical distribution of the funding under the New Contract. PSNC is completely against this practice. The government is currently giving consideration to the problem following the OFT Review of the Pharmaceutical Price Regulation Scheme.
PSNC meets regularly with the Department of Health to discuss progress with the system and problems that arise.
Scheme M & W
On 29th June 2005, details were announced of two voluntary schemes for wholesalers and generics manufacturers (M and W) backed by Section 33 of the Health Act 1999, that are designed to assist the Department of Health in gathering information to support the quarterly revision of Category M prices. Click on the links below for more information on the voluntary schemes for Manufacturers and Wholesalers.
Scheme M: Generic Manufacturers
Category M: Products and Prices
Latest List
Category M: 2010/11 Quarter 2 Price List (Jul 10 - Sep 10) (PDF)
Category M: 2010/11 Quarter 2 Price List (Jul 10 - Sep 10) (MS Excel)
Category M: 2010/11 April & July changes combined (MS Excel)
Archive List
Category M: 2010/11 Quarter 1 Price List (Apr 10 - Jun 10) (PDF)
Category M: 2010/11 Quarter 1 Price List (Apr 10 - Jun 10) (MS Excel)
Category M: 2010/11 January & April changes combined (MS Excel)
Category M: 2009/10 Quarter 4 Price List (Jan 10 - Mar 10) (PDF)
Category M: 2009/10 Quarter 4 Price List (Jan 10 - Mar 10) (MS Excel)
Category M: 2009/10 October & January changes combined (MS Excel)
Category M: 2009/10 Quarter 3 Price List (Oct 09 - Dec 09) (PDF)
Category M: 2009/10 Quarter 3 Price List (Oct 09 - Dec 09) (MS Excel)
Category M: 2009/10 July & October Changes Combined (MS Excel)
Category M: 2009/10 Quarter 2 Price List (July 09 - Sep 09) (PDF)
Category M: 2009/10 Quarter 2 Price List (July 09 - Sep 09) (MS Excel)
Category M: 2009/10 April & July Changes Combined (MS Excel)
Category M: 2009/10 Quarter 1 Price List (Apr 09 - Jun 09) (PDF)
Category M: 2009/10 Quarter 1 Price List (Apr 09 - Jun 09) (MS Excel)
Category M: 2009/10 January & April Changes Combined (MS Excel)
Category M: 2008/09 Quarter 4 Price List (Jan 09 - Mar 09) (PDF)
Category M: 2008/09 Quarter 4 Price List (Jan 09 - Mar 09) (MS Excel)
Category M: 2008/09 October & January Changes Combined (MS Excel)
Category M: 2008/09 Quarter 3 Price List (Oct 08 - Dec 08) (PDF)
Category M: 2008/09 Quarter 3 Price List (Oct 08 - Dec 08) (MS Excel)
Category M: 2008/09 July & October Changes Combined (MS Excel)
Category M: 2008/9 Quarter 2 Price List (Jul 08 - Sep 08) (PDF)
Category M: 2008/9 Quarter 2 Price List (Jul 08 - Sep 08) (MS Excel)
Category M: 2008/9 April & July Changes Combined (MS Excel)
Category M: 2008/9 Quarter 1 Price List (Apr - Jun 08) (PDF)
Category M: 2008/9 Quarter 1 Price List (Apr - Jun 08) (MS Excel)
Category M: January & April 2008 Changes Combined (MS Excel)
Category M: 2007/8 Quarter 4 Price List (Jan - Mar 08) (PDF)
Category M: 2007/8 Quarter 3 Price List (Oct - Dec 07) (PDF)
Category M: 2007/8 Quarter 2 Price List (Jul - Sep 07) (PDF)
Category M: 2007/8 Quarter 1 Price List (Apr - Jun 07) (PDF)
Category M: 2006/7 Quarter 4 Price List (Jan - Mar 07) (PDF)
Category M November 2006 Price Changes (PDF)
Category M: 2006/7 Quarter 3 Price List (Oct - Dec 06) (PDF)
Category M: 2006/7 Quarter 2 Price List (July - Sep 06) (PDF)
Category M: 2006/7 Quarter 1 Price List (Apr - Jun 06) (PDF)
Category M: 2005/6 Quarter 4 Price List (Jan - Mar 06) (PDF)
Category M: 2005/6 Quarter 3 Price List (Oct - Dec 05) (PDF)
Please note the archive lists do not include all additions, deletions or changes made mid-quarter.
Category M: Frequently Asked Questions
If the manufacturer increases their list price for a branded medicine, when will this be applied by NHS Prescription Services for reimbursement purposes?
As prices in the market are constantly changing, there is an agreed mechanism in place to increase and decrease the reimbursement prices for medicines.
For proprietary preparations and Part VIII products where the price is based on a proprietary product (e.g. most Part VIII Category C products), a price change up to and including the 8th of the month takes effect for prescriptions dispensed in the following month. A price change after the 8th of the month will be applied for reimbursement purposes to prescriptions dispensed one month later.
For example, if the manufacturer's list price for a proprietary product changed on the 6th of November, the new reimbursement price would apply to prescriptions dispensed in December. If a manufacturer's list price changed on the 15th November, the new reimbursement price would apply to prescriptions dispensed in January.
For non-proprietary or generic drugs (including Part VIII, Category A medicines but excluding products in Part VIII, Category M) the reimbursement price change takes place one month earlier that proprietary medicines. For example, if the manufacturer's list price changed on the 6th of November, the new reimbursement price would apply to prescriptions dispensed in November. If a manufacturer's list price for a generic drug changed on the 15th November, the new reimbursement price would apply to prescriptions dispensed in December.
The reimbursement prices of category M medicines are changed quarterly. The next change will be in January 2010.
Why were Lansoprazole Capsules added to Category M mid-quarter?
The Department of Health moved Lansoprazole gastro-resistant capsules 15mg and Lansoprazole gastro-resistant capsules 30mg into Part VIII Category M with effect 1st March 2006.
The patent for Zoton capsules expired in mid December 2005. In the past when a patent expired, the product would be transferred from Part VIII Category C to Category A. The Department of Health have indicated that they now intend to effect a speedy transfer of products into Category M following patent expiry.
The New Contract funding arrangements include guaranteed levels of retained buying profit which are measured based on independent pharmacy contractors. PSNC works closely with the Department of Health on monitoring mechanisms to ensure that the guaranteed £500m purchase profit is delivered.
Why was there a substantial change to the Category M prices in the second quarter of 2005/06?
The substantial changes to Category M prices in the second quarter (July - September) were mainly due to the agreement of the Department of Health to remove Amlodipine from Category M. PSNC requested this in the light of widespread concern by contractors about the price increases in Amlodipine at the beginning of 2005. The effect of removing Amlodipine, after the prices for Category M had been calculated, was, on the Department of Health’s calculations, that there had been a substantial under-recovery of the target £75million reduction in purchase prices for the first quarter of the year. The Department of Health sought to ensure that the July Category M prices removed this shortfall.
PSNC monitors the impact of all changes to Category M to ensure that over the course of the year only the correct amount is removed.
Prescription volumes are very hard to predict. It is not possible to calculate the actual amount of money removed from price changes until the NHSBSA Prescription Services is able to provide data for each quarter of the year, and that always takes some months. The Amlodipine situation described above is unlikely to recur, but there will continue to be a system of estimates and adjustments.
PSNC has been in discussion with the Department of Health over the most appropriate volume measures to use to minimise the adjustments that need to be made each quarter.
When will contractors see some stability in Category M prices?
Some instability in Category M prices is to be expected becasue they are commodity products. Indeed changes in relative prices are driven by changes in manufacturers' prices. In addition to this annual changes are made to Category M prices to reflect the findings of the profit monitoring inquiries. Changes in general price levels at other times reflect either an under- or over-recovery due to actual volumes being different to the forecast volumes used in the calculations.
Why are some Category M prices so high?
A number of lines known as niche lines appear to have excessively high prices. The DH is aware of this and recently put plans in place to reduce the price of one of these, Phenytoin. The cost saving was factored back into higher prices for other lines within category M. PSNC is pressing the DH to reduce the prices of other niche lines.
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