Changes to Category A price setting process
New arrangements for the setting of Drug Tariff Category A reimbursement prices will be introduced by the Department of Health and Social Care (DHSC) from April 2024.
The changes form part of a series of drug reimbursement reforms proposed by DHSC following a public consultation in 2019.
DHSC’s decision, determined by Ministers, is primarily focussed on an ambition to equalise access to margin on Category A medicines.
DHSC is imposing the changes. Community Pharmacy England did not support the introduction of the changes at this time because of the wider challenges pharmacies are currently grappling with and the unknown impact that these changes could have on the already turbulent medicines supply chain.
From 1st April 2024, Category A prices will begin transitioning to the new arrangements, which will see reimbursement prices updated quarterly based on sales and volume data obtained by DHSC under the Health Service Products (Provision and Disclosure of Information) Regulations 2018.
The transition will take place over six financial quarters, concluding in July 2025 when the reimbursement prices will be set solely using the new method. Notice of these changes has been outlined on the NHSBSA website.
Prices of medicines in Category A are currently subject to monthly adjustment. Moving to less frequent price updates for Category A medicines could increase price volatility and the need for price concessions. We encourage pharmacies to report any problems obtaining a Part VIII product at or below the stated Drug Tariff price, using the online feedback form on our website.
Mike Dent, Director of Pharmacy Funding at Community Pharmacy England, said:
“Now is not the time to be tampering with established price-setting processes and as such Community Pharmacy England has not accepted these changes going ahead. Community pharmacies are weighed down by long-standing funding pressures and already struggling to keep up with the large number of medicines supply issues: there is little to be gained and much to lose when we can’t predict how the market may react to these changes.”
Further information
Category A includes generics, which are widely available. Currently, the reimbursement prices of these products are set monthly, based on a weighted average of the list prices from two wholesalers (AAH and Alliance Healthcare) and two generic manufacturers (Teva and Accord-UK).
Under the new process, DHSC will use quarterly sales and volume data obtained under the Health Service Products (Provision and Disclosure of Information) Regulations 2018 to set Category A prices.
The transition to the new arrangements will take place over six financial quarters from April 2024 until July 2025. Each quarter the prices will be more dependent on the new methodology, with a variable weighting of the old and new methods being applied as set out in the table below:
| Quarter | New arrangements | Old arrangements |
| April-June 2024 | 15% | 85% |
| July-September 2024 | 30% | 70% |
| October-December 2024 | 50% | 50% |
| January-March 2025 | 70% | 30% |
| April-June 2025 | 85% | 15% |
| July 2025 | 100% | n/a |
Accordingly, two calculations will be made, one in reliance on the old formula and one in reliance on the new methodology, and the reimbursement price applied will be a weighted average of those two price-setting calculations.
View the announcement in full on the NHSBSA website.
Briefing 006/24: Category A drug reimbursement reforms FAQs
Read Community Pharmacy England’s (formerly PSNC) response to DHSC’s 2019 consultation on drug reimbursement reforms here.
