How do pharmacies in the uk generate turnover?

[BudFox888]

Hi

I am looking into starting a pharmacy service in Edinburgh I have a local pharmacist who needs a little backing business wise, he is young and ambitious and has made some great contacts thus far. I just wanted to get some know how from people in the field.

My pharmacist potentially has a contract for 4 nursing care homes what I want to know is how does a pharmacy get paid? Do they claim from the NHS? How do they order the drugs etc and do they pay for these up front and claim back once scripts are made up?

I know these sound like very basic things. Of course my potential partner has given me some info but like I said Im not a pharmacist just want opinion from an independent person before I invest my time and money.

Any help is very much appreciated

[tinx25388]

I'm not a Pharmacist, only a dispenser, but this is the basic principle:

In this case, the Care Homes would send the prescriptions to the Pharmacy, then the Pharmacy whould order the stock from the wholesalers and dispense them. At the end of the month, all of the prescriptions dispensed that month will be sent to the NHS Business Services Authority, where they are priced and a payment made. For more information on specific payments, see the Drug Tariff (if you put "Drug Tariff" into google you can access it free online!)

[Pharmanaut]

I'm not a Pharmacist, only a dispenser, but this is the basic principle:

In this case, the Care Homes would send the prescriptions to the Pharmacy, then the Pharmacy whould order the stock from the wholesalers and dispense them. At the end of the month, all of the prescriptions dispensed that month will be sent to the NHS Business Services Authority, where they are priced and a payment made. For more information on specific payments, see the Drug Tariff (if you put "Drug Tariff" into google you can access it free online!)

If you are in Scotland start here. Scottish Drug Tariff

If you are in a low income/deprived area you can offer MAS.
Generally you need to buy wisely to beat the tariff price so that you maximise what's left after the discount clawback.
Slightly different in Scotland as there is a fixed clawback on Part 7, with variable on non-part 7.

Balance the cost of the MDS service against the resources put into providing it.

[BudFox888]

If you are in Scotland start here. Scottish Drug Tariff

If you are in a low income/deprived area you can offer MAS.
Generally you need to buy wisely to beat the tariff price so that you maximise what's left after the discount clawback.
Slightly different in Scotland as there is a fixed clawback on Part 7, with variable on non-part 7.

Balance the cost of the MDS service against the resources put into providing it.

Thank you for your comments.

MDS= Monitored dosage system right?
what is MAS?

So if im getting this right.... Scripts come in, order placed with wholesalers, drugs dispensed, claim made to NHS business services.

Am I right in saying wholesale price if sufficiently cheaper than the price the NHS pay out and thats where profit is made?

So in effect Profit = Money from NHS - Wholesale - pharmacist salary?

My colleague is a dispensing pharmacist also do we require any further licensing to establish the service?

Again many thanks for your help and comment

[BudFox888]

DMD_VMPP_ID Drug Form Strength Quantity Feb-11 Cat Source
983611000001109 Aciclovir Tabs 200mg 25 419 A ê

I have pasted an example of the drug tariff above it the price part in pence? Below the Feb-11 column? ie NHS will pay £4.19 for 25 tabs of Aciclovir 200mg?

thanks again

[johnep]

Theoretically, system supposed to be funded as in US ie drugs at cost with a dispensing fee for each item.
This was the infamous deal where control of entry was established in exchange for giving up 'purchase profit'.
The government then steadily reduced the dispensing fee and allowed entry via 100 hour route.
Since then has been continual tussle with pharmacies endeavouring to purchase below DT cost and where this happens sufficiently, the government then reduces the DT price. This was the cause of parallel importing. When the pound was high, the government was happy to take advantage, now the pound is low, leading to parallel exporting, the government moans about profiteering pharmacists.
johnep

[BudFox888]

Theoretically, system supposed to be funded as in US ie drugs at cost with a dispensing fee for each item.
This was the infamous deal where control of entry was established in exchange for giving up 'purchase profit'.
The government then steadily reduced the dispensing fee and allowed entry via 100 hour route.
Since then has been continual tussle with pharmacies endeavouring to purchase below DT cost and where this happens sufficiently, the government then reduces the DT price. This was the cause of parallel importing. When the pound was high, the government was happy to take advantage, now the pound is low, leading to parallel exporting, the government moans about profiteering pharmacists.
johnep

Regarding dispensing charge if it £3. For example a care home resident would be exempt due to age but would imagine NHS pays cost is that correct?

Sorry Im a real layman. I really just trying to see where the money is actually made as a dispensing pharmacist and what license is needed. I have a good grip on where to source how they will be dispensed and to contact NHS to claim for cost. Im just not sure on actually how to arrive at profit figure.

e.g if I owned a corner shop - I go to cash and carry and buy 10 mars bars at £2. Sell them for £0.50 a bar make £5 cash less cost £2 less staff cost = profit.

thanks again for comments

[johnep]

£3? You should be so lucky, last time I checked was 94p. In the old days, standard pharmacy mark up was 50%. Ie £1 worth of goods sold at £1.50. This was eroded by abolition of Resale Price Maintenance. Now, anything goes. BOGOF and 3 for 2 offers used by multiples and supermarkets common. No protected sales these days except perhaps for 'p' meds and both government and manufacturers anxious to remove this 'hindrance to trade'. Sweets you mention are an apposite example, high profit items.
That is why they are on such prominent display.
johnep

[BudFox888]

No sorry your not getting me (sorry if im not making sense) I dont want to sell sweets Im using that as an example.

My question in simple terms is - If I were to start a pharmacy service how do I make money?

Im not a pharmacist yet but have a dispenser in place. Potentially have a contract to supply 4 care homes but dont know how the revenue is generated in practice.

If anyone can clarify your help is greatly appreciated

[johnep]

OK Here are the main income streams.
1) 94p approx for each item prescribed. For MDS you would want 7 day scripts to fund, many surgeries refuse.
2) Profit on counter sales.
3) Profit on those items you can obtain below DT list price.
If pharmacy is very small in area of need, then does get essential small pharmacy grant. Otherwise potential profit entirely dependent on turnover. Break even point varies according to location and expenses. You would really need something like 200 items a day as minimum.
johnep
johnep