average item profit?

[naf123]

Hi,

I'm working on a business plan.

I am wondering what figure is given for average expected profit of drug per item?

(not dispensing fee etc)

Can anyone help?

thanks

[Tony Schofield]

Get a drug tariff and work it out. The DT is available on line now.

[naf123]

I am aware of it.

There is a deduction scale. So if the wholesaler gives 11% discount and you minus the deduction rate - you will get a % overall.

What is the average item worth? I saw it somewhere it was £9.04

Is that true/sounds normal?

Thanks

[Tony Schofield]

You need to look at the fees that are payable also. Look on PSNC website for average costs and fees etc.

[Tony Schofield]

Hi,


(not dispensing fee etc)

Just saw this. The purchase profit allowed that isn't clawed back using Cat M and the deduction scale is, and has been since 2005, £500m. That needs to be divided by the total number of items dispensed in England and Wales in ayear to get the value per prescription.

On average it is a little less than £50k per pharmacy doing the average number of items per year.

[bobbin]

What is the average item worth? I saw it somewhere it was £9.04

That would be close to the average cost of an item in many areas. You certainly don't make anywhere near £9 profit though!

[naf123]

I feel sorry for high volume pharmacies because if they do, say 8000 items a month.

8000 * 9.04 = £72,320 (drug bill)

Say the wholesaler gives 11% discount. NHS gives 10.09% deduction which means only a profit of 0.91%

0.91% of 72,320 is £658.11

Only £658 profit per month (excluding fees) for an 8000 items pharmacy? It is absurd! By the time they paid the pharmacist, the dispensers etc, what money left is there?

Or am I missing a trick? I am aware of certain items that are DNG. What % overall are they?

thanks

[LeftArm]

The clawback system is outdated and should be stopped because:
Direct to Pharmacy supplies (Pfizer etc.) are not discounted at the rate of the clawback if at all.
Category M pricing on Generics means that their prices can be adjusted to reflect real life pricing (not that they do but that they can)
The current European financial situation means that there is no PI market (this was one of the major reasons for introducing the system in the first place.)
I blame PSNC for their lack of support for pharmacy.

[Tony Schofield]

I agree that the recovery mechanism is out dated. However it does leave £500m of purchase profit in the system. An average pharmacy (doing the average number of prescriptions) would make about £50k in purchase profit but that would be dependent on a decent percentage of generics. As you say branded medicines have no profit in them.

The PI market is depressed because the pound is weak against the euro, not because of turmoil in ethe eurozone.

PSNC do monitor discounts available and whilst the mechanisms may be out moded they do deliver the correct figures. I am reliably informed!

"
8000 * 9.04 = £72,320 (drug bill)

Say the wholesaler gives 11% discount. NHS gives 10.09% deduction which means only a profit of 0.91%

0.91% of 72,320 is £658.11

Only £658 profit per month (excluding fees) for an 8000 items pharmacy? It is absurd! By the time they paid the pharmacist, the dispensers etc, what money left is there?"


The profit comes from fees. The avearge gross profit of a reasonable pharmacy is about 30%. That includes purchase profit, fees and OTC

[LeftArm]

The PI market is depressed because the pound is weak against the euro, not because of turmoil in ethe eurozone.

I never even mentioned turmoil! I don't think the major drug companies will let PI's return either now that they are controlling the supply chain through DTP.

There are PSNC figures for prescription profits here:
NHS Statistics · Funding & Drug Tariff · PSNC
These give a gross profit per script of around 20% (Including MUR fees)
With the best will in the world I can't see an average pharmacy getting that up to 30% on counter trade when the scripts account for such a large portion of the business.

However it does leave £500m of purchase profit in the system.

In all honesty I don't understand this bit. How is this measured? It's not on the PSNC remuneration statistics. Is it fairly distributed?