Financial Framework 2019/20



Community Pharmacy Funding in Scotland

Scottish community pharmacies are paid to deliver pharmaceutical care services to the people in the communities they serve on behalf of the NHS. Understanding and explaining exactly how pharmacies are paid can be tricky, so we have created this resource to help you understand what’s what – and more importantly, why pharmacies are paid in the way that they are.

Let’s start with the basics. There are three main funding streams for community pharmacy, and we think it’s quite useful to think of the community pharmacy network as an “employee” of the NHS to help remember them:

Remuneration Reimbursement Additional funding

Each year, the CPS negotiating team work with the Scottish Government to agree on a financial package – this lays out a defined amount of funding available to allow core services to be provided (Remuneration), which we call the Global Sum as all contractors will benefit from the available “pots”, which we will cover later. The pie chart below will give you an overview of how this year’s entire Global Sum is broken down – we’ll go into more detail on each element later


There are some small elements of our national funding which do not fall into the Global Sum - for example, not all contractors will need to take advantage of training grants and the arrangements for stoma dispensing and Medicines Complete access are technically contracts in their own right – together we call these “extra bits” the Non-Global Sum

The financial package also describes the arrangements for the Reimbursement Reimbursement element of the annual agreement i.e. the conditions agreed around the funding that comes from buying certain medicines for a bit less than the NHS pays us for them.

Advance Payment

Advance payments are made to support contractor cashflow while actual payment for the prescriptions submitted is calculated.

When pharmacies submit prescriptions to Practitioner Services, they are fully paid at dispensing month + 3 months (for prescriptions dispensed in January, they are submitted at the start of February and are paid at the start of April).

The payment date set out in the drug tariff for the example above is the first working day of July, however, Practitioner Services frequently make this payment at or before the last working day in June.

The timelines involved are shown in the following graphic.


This means that each monthly payment is made up of components from different dispensing months as shown below:

Payment Made Recovery of Advance From Total Due for Month Advance For

April (as shown above in graphic)

January Prescriptions

January Prescriptions

February Prescriptions


February Prescriptions

February Prescriptions

March Prescriptions


March Prescriptions

March Prescriptions

April Prescriptions

To support contractors’ cash flow while the reconciliation happens, an advance payment of 90% of the last 12 month’s average gross total monthly payment is made (in the above example at the end of January).

For the dispensing month of December, the advance payment rate is 100% of the monthly average and for the dispensing month of January it’s 95%.

Advanced payments for brand new contractors are explained in the payments to new contractors section.

Margin Sharing Arrangements

As touched on in the introduction to pharmacy funding, pharmacies can earn a level of profit on part 7 drug tariff medicines they source and provide on prescription – this profit is often referred to as the margin. This incentivises efficient buying, as pharmacies will shop around for the best price for the items they are supplying to get the best deal possible on behalf of the NHS.

To monitor the margin, the Scottish Government has a pricing survey completed to compare the invoice price paid by pharmacies to the price Practitioner Services pay, the difference being the margin earned. The survey result is used to monitor the total margin across the year and if it’s more than the agreed amount, then 50% of the difference is due back to Health Boards. The exact way this is done is agreed between CPS and the Scottish Government, but the ‘generic clawback’ is the most common approach to return money. Clawback is talked about further in the reimbursement section.

The arrangements in circular PCA(P)(2019)13 cover the margin sharing arrangements for 2019/20:

  • The level of guaranteed minimum funding for contractors is £80 million;
  • If market conditions allow, pharmacy contractors can retain all of the first £10m earned above the guaranteed minimum of £80m. This means that contractors have the opportunity to earn up to £90m in retained margin before margin sharing arrangements kick in;
  • Any margin earned above £90m will be shared on a 50:50 basis with NHS Boards;
  • Generic clawback of 6% will return £20.8m due to Health Boards owed from the 2018/19 margin sharing arrangements;
  • If the market deteriorates and the guaranteed margin is not being achieved, the clawback rate may be altered or suspended;
  • If the clawback rate is altered or suspended, any money due but not paid back to Health Boards will be carried into 2020/21 financial year.

Dispensing Pool Arrangements

A big part of each pharmacy’s workload is the dispensing of prescriptions for people on behalf of the NHS. Whilst the reimbursement element of our financial package covers the cost of the medicines which are bought and used as part of patient care, there needs to be a way of paying (remunerating) the pharmacy for the time and effort which goes into physically making the prescriptions up and ensuring that the medicines prescribed are safe and effective (i.e. the staff, expertise and resources costs).

To do this fairly, each pharmacy gets a proportion of a monthly “dispensing pool” of £9.451m (from July 2018) based on the number of prescriptions and instalments they do. Instalment and “normal” dispensing are both given the same weighting (i.e. each counts as “1”) when adding up a pharmacy’s dispensing activity. Very simply, the principle is that if your pharmacy does 1% of the prescription work carried out across the whole network, you get 1% of the funding pot.

It’s not quite that simple though – if a pharmacy does a lot of dispensing to care homes (over 2.5% of their prescriptions), this attracts a different fee from a separate pot of money to reflect the different type of workload that care home prescriptions bring. We will describe this care home element in more detail further on.

It would be extremely challenging to calculate what percentage of total dispensing a pharmacy has done in a given month during the payment process – it’s impossible to know how many prescriptions have been dispensed across the whole country until the very end of the process. To manage this, the average of the last three months’ activity is calculated for each pharmacy and used as a reference to set the Dispensing Pool payment for each quarter as follows:

Average dispensing taken for months: Sets Dispensing Pool payment for months: Bank payment at month end

Set 18 - Nov 18

Apr 19 - June 19

June 19 - Aug 19

Dec 18 - Feb 19

July 19 - Sept 19

Sept 19 - Nov 19

Mar 19 - May 19

Oct 19 - Dec 19

Dec 19 - Feb 20

June 19 - Aug 19

Jan 20 - Mar 20

Mar 20 - May 20

Establishment Payment

Over the years as the pharmacy contract has changed, different service payments have been joined together into what we now call the Establishment Payment

This is a monthly payment fixed at £2,095 per month (except for part- time essential small pharmacies) and is made up from the following original payments:

  • Payment Supplement
  • PHS Payment Core Element
  • Infrastructure Support Payment;
  • Unscheduled Care Support payment;
  • Plus the base level payable previously for the professional allowance (= £575).

This reallocation of payments means that there will be no more mention of the above payments on any of the monthly payment schedules or in any current documentation.

The establishment payment will be scaled for Essential Small Pharmacies (see ESP section) in accordance with the existing provisions for opening hours.

Pharmaceutical Needs Weighting Payment

The Pharmaceutical Needs Weighting Payment (PNWP) makes payment for the additional pharmaceutical needs (and associated workload) from age and deprivation characteristics of the people using the pharmacy.

For each contractor the following has been identified:

  • Proportion of dispensing patients aged 60 or over
  • The percentage of dispensing patients with postcodes in the two most deprived quintiles according to the Scottish Index of Multiple Deprivation (SIMD)

These two factors are combined to produce a combined index for each pharmacy.

For example, a pharmacy may have between 65% and 75% of their patients under 60 years (age index 1.2) and between 60% and 80% of patients with their postcode in the most deprived quintiles (SIMD index 1.4). The combined index is calculated as the average of the 2 so for this pharmacy the combined index is 1.3.

The combined index for every pharmacy across Scotland is calculated and each pharmacy will then receive a proportional share from the PNWP pool which is a monthly pool of £0.320 million (£3.845 million per year)

Age Age Index SIMD SIMD Index

75% or more of patients under 60 years


40% or less of patients with postcode in the two most deprived quintiles


Between 65% and 75% of patients under 60 years


Between 40 and 60% of patients with postcode in the most deprived quintiles


Between 65% and 75% of patients under 60 years, with more 75+ than 60-74


Between 40 and 60% of patients with postcode in the most deprived quintiles, and more in the most deprived quintile


Between 55 and 65% of patients under 60 years


Between 60 and 80% of patients with postcode in the most deprived quintiles


Between 55 and 65% of patients under 60 years, with more 75+ than 60-74


Between 60 and 80% of patients with postcode in the most deprived quintiles and more in the most deprived quintile


Between 45 and 55% of patients under 60 years


Between 80 and 90% of patients with postcode in the most deprived quintiles


Between 45 and 55% of patients under 60 years, with more 75+ than 60-74


Between 80 and 90% of patients with postcode in the most deprived quintiles and more in the most deprived quintile


Between 35 and 45% of patients under 60 years


More than 90% of patients with postcode in the most deprived quintiles


Less than 35% of patients under 60 years


More than 90% of patients with postcode in the most deprived quintiles and more in the most deprived quintile


Contractors added to the pharmaceutical list between 1 April 2019 and 31 March 2020 inclusive will receive a proxy monthly Pharmaceutical Needs Weighting Payment calculated using a combined index of 1.0.

Care Home Element

Dispensing prescriptions for patients who live in care homes brings with it a slightly different workload when compared to dispensing for the greater population. Pharmacies which do a lot of this activity relative to their more “standard” work are recognised for this by being remunerated for it at a different rate in recognition of this. There is a special marker in NHS systems to help identify care home patients, so their prescriptions can be analysed separately from all other dispensing activity – although it is all done at the same time.

For pharmacies that do a little care home dispensing in relation to the rest of their work (less than 2.5% of all dispensing), this is treated in the same way as any other activity and each prescription item will count towards the dispensing pool payment as described earlier. In effect, no action is taken by the pricing department.

For those who dedicate a larger part of their business to fulfilling care home prescriptions (over 2.5% of all dispensing), the prescription items do not count towards their dispensing pool payment. Instead, they are reimbursed from a separate monthly pool of £0.352m depending on how much activity has been carried out nationally, in exactly the same way as the larger dispensing pool is divided up. The same reference months are also used to set the care home element payments each quarter.

Service Efficiency Payment

Formerly known as the Quality and Efficiency Payment, the Service Efficiency Payment is for achieving a target level of electronic claiming for prescriptions submitted for pricing by Practitioner Services.

Existing contractors have a target payment amount and any new contractors added to the Pharmaceutical List from 1st April 2019 will have a target payment of £150 per month.

From 1st September 2018, to receive the payment, contractors must achieve a claim rate of at least 80% for all possible claims, including care home items, instalments and stoma items.

On or above this 80% threshold, the contractor will receive a full payment of their own target SE payment. Below the threshold, contractors will not be eligible for any payment, except in the following circumstances:

A contractor who wouldn’t otherwise receive a payment for a particular month may request the Health Board to consider failure to achieve the 80% threshold as exceptional and out with the contractors control, and authorise a special payment. If an application is made, and the Health Board considers that failure to achieve the 80% threshold is out with the contractor’s control, a full or partial payment may be authorised at the discretion of the Health Board.

Where there are issues locally, for example where a surgery has had network connection issues, contractors should call the ePharmacy helpdesk to make them aware. This can then be considered along with the SE% achieved.

MCR Capitation Payment

The payments for MCR - Medicine Care Review (Previously called CMS) are made using one of the more complex models in our financial package and is based on the number of people registered for the service (capitation model) at the end of a given month. The funding also requires a bit of a history lesson…

Our overall funding model, as it stands just now (give or take a few tweaks over the years), has been in place since late 2011. It was a massive and complicated job to put in place a new service-based contract whilst making sure that no-one lost out when moving from a contract that relied more heavily on dispensing volume. To achieve this, each pharmacy had a proportion of their “old” funding repurposed to pay for MCR. This was more for some pharmacies and less for others depending on their dispensing activity.

These contribution amounts are still used in calculating MCR payments today. In order to get their full contribution from the £3m MCR funding pool each month, each pharmacy must have a certain number of patients registered for the service and have completed a care needs assessment for each. This number is calculated at the end of each month by counting the number of valid registrations across the whole country and for each individual contractor. Put simply, if the contractor contributed 1% of the funding back in 2011, they need to have completed 1% of the registrations to get their full funding for the month. As the whole calculation is done at once, pharmacies cannot know exactly how many registrations to aim for, but our ready reckoner tool gives as accurate an estimation as is possible. When pharmacies do not manage to register enough people, their monthly funding can be reduced by up to 10%. On the other hand, these underpayments allow other pharmacies the opportunity to earn up to 10% more than their allocated funding if the register more people than expected.

Any pharmacies which opened after the move from the old contract to the new obviously hadn’t made a contribution to the funding of MCR, so they have a slightly different arrangement to reflect this. They receive a £600 minimum payment, to begin with, but have no maximum payment set - so if they do build their business and deliver pharmaceutical care for people with long term conditions to a similar level as their more established counterparts, they are remunerated appropriately.

Quality and Service Development (QSD)

Formerly known as the Operations and Development Payment, this supports the operation of a service for coeliac patients, the development of a safety culture and the readiness of community pharmacies to dispense serial prescriptions.

Every pharmacy that is signed up to provide the Gluten-free Foods Service (GFFS) to people referred by their GP or dietitian will receive a fixed payment of £125 per month. This payment includes managing food orders, ensuring CHI number capture when prescribing and carrying out an annual health check for every client.

To support the development of the pharmacy team, empowering them to continually review the safety of their working practices, every pharmacy will receive a fixed payment of £220 per month. This is made available to every pharmacy team that completes that years’ Quality Improvement activities as described in the funding circular from Scottish Government. Specific details of the activities to be completed are released in a separate circular mid-year and are normally focussed on patient safety factors.  Activities from November 2019 to March 2020 will support the implementation and training requirements for the Extended Minor Ailments Service from April 2020.

To make sure they are ready to dispense serial prescriptions, every pharmacy will receive £60 per month for having serial dispensing Standard Operating Procedures (SOPs) in place. If, following checks carried out by Health Boards, these are found not to be in place, the monthly payment will be reduced to £45.

Minor Ailments Service

Payments for the Minor Ailment Service are based on the number of patients registered with the pharmacy at the end of each month. This is called a Capitation Payment. The numbers are banded, and each band is paid as shown in the table below.

Band Number of Registered Patients Capitation Payment Annual Capitation Payment Monthly
1 1-250 £7,300.92 £608.41
2 251-500 £9,253.92 £771.16
3 501-750 £11,208.00 £934.00
4 751-1000 £13,218.00 £1,101.50
5 1001-1250 £15,228.00 £1,269.00
6 >1250 Band 5+£8.04 per patient beyond 1250 Band 5+£0.67 per patient beyond 1250

Changes in ownership

Where a pharmacy changes hands during a month, the MAS payment is made to the contractor on the pharmaceutical list on the last day of the month.

Payments to Essential Small Pharmacies for MAS

Payments to Essential Small Pharmacies are scaled to the opening hours of the pharmacy. Details can be found in the 2019/20 funding circular.

Pharmacy First Service

Prior to July 2019, Pharmacy First services (for uncomplicated UTIs and Impetigo only) were developed and delivered locally, though they were supported using monies from a transformational change fund following a successful national bid by CPS and NHS 24.

From 2019/20 onwards, the funding pot of £1.08m will become part of the Global sum and will be distributed centrally. This is a preparatory step as we move towards an extended MAS service launching in April 2020, which will include these services.

As such, the transitional funding arrangements for 2019/20 are as follows:

Period Payment Payment Method Action
April 2019 – June 2019 In the absence of robust data for all contractors for this period, £0.27m will be distributed to contractors evenly (£219 per contractor for the quarter) One off fee for the first quarter None
July 2019 – March 2020 £20 per activity* Payment made quarterly – noted on payment schedule as Pharmacy First. Contractors to complete pro-forma and submit to Health Board for processing.

*Pharmacy First “activity” is classed as advice, referral or supply to patients.

Pharmacy teams should make sure that they complete the form found at Annex A of the circular and send it to their Health Board by the 5th of each month to ensure accurate remuneration.

The community pharmacy contractor will ensure that all pharmacists involved in delivering the scheme complete the NES Pharmacy First training pack, on the Turas Learn platform available at and participate in any local training programme (including update training) as identified by the NHS Board in accordance with agreed local standards.

Public Health Service

The Public Health Service elements of the National Scottish Contract for 2019/20 are: Public health poster campaigns; Smoking Cessation; Emergency Hormonal Contraception and; Prophylactic paracetamol supply to support Meningitis B vaccination programmes. 

It has been agreed to maintain the same level of remuneration for the smoking cessation service interventions. Supplies of EHC made under the service will now be remunerated at £30 instead of the previous £25 to reflect the ongoing impact the service has on public health priorities.

Any contractor asked to provide the Chlamydia Testing and Treatment service should ensure the local NHS Board has agreed a service specification and payment structure with the local Community Pharmacy Health Board Committee.

Smoking Cessation Service

The table below details the elements of the service and the payments related to these.

Event A The Community Pharmacy submits the MDS information with confirmed quit date (normally first return appointment)The MDS information needs to be electronically submitted once the quit-date is confirmed with the client. This determines the date for “Week 1” which then forms the basis of the timelines for the four-week and twelve-week post-quit date follow-ups.£30 A count will be made on the central smoking cessation database of patients for MDS submission for new quit attempts that meet the validation requirements that have not been remunerated.

Quit attempt event MDS submission Remuneration
Event A The Community Pharmacy submits the MDS information with confirmed quit date (normally first return appointment) The MDS information needs to be electronically submitted once the quit-date is confirmed with the client. This determines the date for “Week 1” which then forms the basis of the timelines for the four-week and twelve-week post-quit date follow-ups. £30 A count will be made on the central smoking cessation database of patients for MDS submission for new quit attempts that meet the validation requirements that have not been remunerated.
Event B Four-week post-quit date To be electronically submitted immediately after the four-week post-quit date and not later than six weeks from the confirmed quit-date. £15 A count will be made on the central smoking cessation database of patients for MDS submission for new quit attempts that meet the validation requirements that have not been remunerated
Event C To be electronically submitted immediately after the twelve-week post-quit date and not later than sixteen weeks from the confirmed quit-date. £35 A count will be made on the central smoking cessation database of patients for MDS submission for new quit attempts that meet the validation requirements that have not been remunerated

Sexual Health Service - Provision of Emergency Hormonal Contraception (EHC)

Payment Element Amount How to Claim
Fee per Intervention £30 per intervention where a patient is prescribed and supplied treatment for Emergency Hormonal Contraception

Claim forms to be sent to Pharmacy Payments at PSD by the 7th working day of the month.

CPUS scripts for Levonorgestrel and Ulipristal Acetate should be submitted to PSD for payment in the bundle

PHS Provision of Prophylactic Antipyretic (Paracetamol) following Meningococcal Group B Vaccine

All contactors who have arrangements with their NHS Board for the provision to support for Meningitis B vaccination programme will receive with April 2017 dispensings a reduced monthly payment of £20. The balance of the monies from this pool will be redistributed to the Establishment Payment.

Contractors should note that following a change in licensing the National Patient Group Direction (PGD) outlined in circular PCA(P)(2015)25 is no longer required for the dispensing of Prophylactic Antipyretic (Paracetamol).

Payments to Essential Small Pharmacies

The total Establishment Payment plus Dispensing Pool Payment plus Pharmaceutical Needs Weighting Payment made to an Essential Small Pharmacy (ESP) each month, are subject to a guarantee minimum target income of £3,804 for full time contractors.

Where an ESP opens less than 30 hours, the guaranteed proportion of £3,804 is calculated as follows:

hours Contractor Open % of Single Flat Rate Payment
>5</=10 60%
>10</=15 75%
>15</=20 85%
>20</=25 90%
>25</=30 95%
>30 100%

The total of the Establishment Payment plus Dispensing Pool plus Pharmaceutical Needs Weighting Payment to be made to an ESP each month will be calculated as for all other contractors. If the calculated value is less than the level of the guaranteed minimum payment, a top up – the Essential Small Pharmacy Allowance (ESPA) – of the shortfall will be paid for the month(s) concerned.

Eligibility for the ESP requires a contractor to be included on the register of Essential Small Pharmacies held by their NHS Board. Contractors taking over an existing ESP must have their continued inclusion in the ESP register approved by the Health Board.

There is currently a moratorium on new ESP applications.

Payments to New Contractors

New contractors will be eligible to receive on a monthly basis

Establishment Payment £2,095
Dispensing Pool Allocation £750pm for 3 months
£750pm per month for next quarter or calculated amount due from dispensing pool whichever is the greater. Thereafter, the calculated amount due from dispensing pool.
Pharmaceutical Needs Payment Amount due for a contractor with a combined index of 1
Medicines: Care and Review Service Capitation Payment Minimum monthly payment of £600
New contractors can exceed the registrations target shown in the MCR ready reckoner and are not restricted to ±10%
Service Efficiency Payment Target payment of £150 if the Service Efficiency Payment target level is achieved
Quality and Service Development (QSD) Payment 2019/20 QI activities should be completed to qualify for payments
MAS Payment In line with number of patients registered
PHS Payment In line with number of patients registered, EHC and other public health services

* Dispensing Pool payment – special arrangements for contractors recently added to the Pharmaceutical List, and/or with incomplete dispensing history, or whose dispensing pool payment would otherwise fall below a minimum target

A minimum monthly payment of £750 will apply for dispensing months from April 2019 onwards in respect of eligible contractors who were not on the list, or who did not have a predecessor contractor on the list for the relevant prior reference period used when calculating dispensing pool payments. That minimum payment would then remain in place until the contractor has three consecutive months dispensing activity to be used for the determination of the dispensing pool payment.

However, where a contractor recently added to the list considers that the £750 payment does not fairly reflect their share of overall dispensing activity in the first 3 months of operation, they may make a specific request to ISD within 9 months of the dispensing months concerned for a retrospective adjustment calculation to be carried out. This would establish whether an adjustment calculated by reference to the previous quarter’s dispensing pool would be appropriate. Where the total amount due is less than the £750 already paid no further action will be taken. Where the amount due exceeds £750, an adjustment will be made as soon as practical for the dispensing months concerned and if necessary as a retrospective payment. This provision is back dated to apply for payments related to dispensing month April 2018 onwards.

For brand new contractors the advance payment will be calculated as follows:

Month 1 advance = (no.of days open/31) x £18,000

  • For contractors who opened on the 1st of the month, their month 2 and subsequent advance will be calculated as 90% of the average payment for the number of actual months which data is available.
  • For contractors who opened after the 1st of the month, their month 2 advance will equal: (no. of days in month/31) x £18,000; month 3 and subsequent advances until a 12 month history is available will be calculated as 90% of the average of the number of actual months for which data is available.

Once 12 months data is available, the advance will always be calculated using the latest 12 months average payment.

For the dispensing month of December, the advance payment rate is 100% of the monthly average and for the dispensing month of January it’s 95%.

Training Grants

Funding for staff training for a variety of courses is available to community pharmacy contractors from the Scottish Government.

Contractors can apply for a training grant of up to £800.

Eligible courses include:

  • Pharmacy Services Level 2 or 3 (S/NVQ)
  • Accredited Checking Technician: NPA Accuracy in Dispensing Training Module or equivalent
  • SQA Professional Development Award (PDA) in Final Accuracy Checking by Pharmacy Technicians.

The claim and payment process is managed by NHS Education for Scotland (NES) Pharmacy.

Contractors will need to send evidence that a member of their staff is about to start, has started or has successfully completed one of the above courses during a set time period which is outlined in separate circulars each year (Check our SG circulars section to see this years’ detail).

You will need to submit one of the following documents as eligible evidence:

  • A copy invoice of the cost of the training course;
  • A letter of registration to the course signed by the training provider;
  • A copy certificate of the course completion.

There is generally a strict cut-off date for applications, so make sure you don’t miss out!

Additional Funding

Stoma Service Funding

As well as the Global Sum to pay for pharmaceutical care services, community pharmacy also has access to the Stoma Contract Global Sum to provide this bespoke service to individuals who require it. Community pharmacies who provide stoma products and services to the public should ensure they are signed up to the contract. The Global Sum for the supply of stoma appliances for July 2019 to June 2020 stands at £3.812m and is accessed by other providers of stoma services (e.g. Dispensing Appliance Contractors (DACs)) as well as pharmacies.

Dispensing, customisation and delivery fees are reviewed quarterly and reset within the parameters of the fixed Global Sum. More details can be found in the National Procurement Specification of Requirements, this also contains sign up forms and claim forms for the two elements of the service which must be claimed (i.e. customisation and delivery).

PRPS Funding

Through 19/20 there is funding, for 200 PRPS places throughout Scotland. This figure covers the cost of training and employing these individuals within the pharmacy network. Any contractor wishing to find out more about the PRPS programme should contact NES for details.

Locally Negotiated Services

Just under £20m is spent on locally negotiated services the vast majority of which is spent on substance misuse services (i.e. methadone). Other services which are recognised as additional services locally and are funded accordingly are below:

Service Spend (£)
Substance Misuse 19000000
Residential Home Advice 149000
Rota 64000
Needle Exchange and related services 701000
Collection and Delivery 16000

These services are currently negotiated via local CPHB committees depending on local need. There may be other local services e.g. alcohol brief interventions which are set up locally but paid from non-pharmacy sources of funding.

Palliative Care Funding

The funding that supports the palliative care community pharmacies in every Health Board was added to the Global Sum in 2013/14 and is allocated to each Health Board annually based on historical requirements

Independent/Supplementary Prescribing Clinics

Following a Scottish Government review of how independent and supplementary prescribing clinics were funded, the arrangements for 2019/20 have been modified to provide some additional stability and predictability, which aids service planning. The breakdown of each Health Board’s available funding is as follows:

NHS Board Full Year Funding
Ayrshire & Arran £73,933
Borders £21,050
Dumfries & Galloway £21,719
Fife £68,114
Forth Valley £57,565
Grampian £98,954
Greater Glasgow & Clyde £222,776
Highland £64,443
Lanarkshire £126,662
Lothian £148,529
Orkney £4,842
Shetland £4,914
Tayside £78,497
Western Isles 0
Total £991,998

Reimbursement 2019/20

Part 7 Medicines

The Drug Tariff arrangements are different in Scotland from elsewhere in the UK. You may commonly hear in the pharmacy press and on social media reference to ‘Category M’ in relation to drug tariff pricing. Part 7 of the Scottish Drug Tariff is broadly the Scottish equivalent of this mechanism but with some differences to suit our agreed Tariff arrangements.

  • Part 7 is used to set the reimbursement prices of around 850 commonly prescribed medicines
  • It is the principal price adjustment mechanism to ensure delivery of the retained margin guaranteed as part of the pharmacy funding
  • It uses information gathered from manufacturers on volumes and prices of products sold plus information from National Services Scotland on dispensing volumes to set prices annually
  • As prices have to be set in advance, estimated volumes are used which may differ from actual volumes
  • It is closely monitored by ourselves and the Scottish Government (SG) to ensure that the scheme operates correctly and to identify anomalies. Regular feedback is provided to ISD who manage the Drug Tariff in Scotland and set the prices on behalf of SG
  • Prescriptions submitted with items contained within part 7 will be paid at the published part 7 price and brand or manufacturer endorsements are ignored

Shortages and Adjusted Prices

From time-to-time, due to lots of factors, supply issues can arise for part 7 medicines where-by they are unavailable at the drug tariff price.

We receive reports of this from contractors by telephone or through the shortage reporter on our website and we enter into discussions with National Services Scotland on the items being reported.

National Services Scotland use the information we provide along with other sources to verify issues and may agree to a price adjustment meaning the drug tariff price of the item would be changed (likely increased).

Non-Part 7 Medicines

Items not held in part 7 do not have a published tariff price. Contractors should endorse (on paper and electronically using their system) the brand or wholesaler where they purchased the medicine from. Practitioner Services maintain a price list of many brands and manufacturers and if they have an on-file price, this is used for payment. Where an on-file price is not held, a price endorsement from the contractor may be used, or reference made to the dictionary of medicines and devices for a current price.

Generic Clawback (Part 7)

As part of the margin sharing arrangements and overall pharmacy funding agreement, contractors are allowed to retain an agreed level of margin from part 7 medicines. Where contractors achieve a higher level of margin, discussions as to how this is paid back to Health Boards take place between Scottish Government and Community Pharmacy Scotland.

The mechanism currently being used to return monies due for 2018/19 is generic clawback.  This means that where part 7 items are dispensed by contractors, when paid by Practitioner Services they will have 6% deducted from the price of non-zero discount items which will be retained by the Health Board.

Generic Clawback is currently set at 6% but may be flexed throughout the year as we measure how much money is returned via the mechanism and monitor contractor cash flow.

Proprietary Clawback (Non-Part 7)

The pharmacy funding arrangements allow contractors to retain some of the profit earned on part 7 medicines and set out the funding paid out through the global sum. There is no agreement for profit to be retained for non-part 7 medicines and so clawback is enacted using the margins found within the quarterly pricing survey which is talked about in the margin sharing arrangements. Proprietary clawback is applied on a sliding scale where the higher the pound value paid to the contractor for non-part 7 non-Zero discount medicines, the higher the clawback rate.

Discountable/Zero discount lines

From time-to-time, contractors may be able to achieve discount on some medicines purchased. The opposite is also true and there are a number of medicines where contractors cannot achieve any discount. This list of medicines can be found in Annex A of Part 1 of the Drug Tariff.

Clawback is discussed above, but broadly speaking, there is a mechanism in place so that for lines agreed between Scottish Government and CPS where no discount can be achieved are classified as zero discount (ZD). In practice this means for a part 7 line classed as ZD no generic clawback will be taken and for non-part 7 ZD lines no proprietary clawback will be taken.

Items which are not classified as ZD are considered discountable (and therefore can have clawback applied).

Related Information