Changes to wastage funding
27 November 2019
What we’re proposing
PHARMAC is seeking feedback on a proposal relating to how we fund discarded medicines (“wastage”) in community pharmacies.
The wastage rule is applied to some products in Section B of the Pharmaceutical Schedule to ensure that community pharmacies are reimbursed for the full cost of a pack. Over time, as the type of products that have been listed on the Schedule have changed, the rule has been added to more products.
We are proposing to change the way that community pharmacies claim a subsidy for wastage, to better reflect when products need to be discarded, and to provide more certainty to pharmacists.
We sought feedback last year on a proposal to change how wastage claims are submitted, by enabling pharmacies to submit wastage claims separately from a dispensing. We thank everyone who provided feedback on this proposal, and we have summarised the feedback below.
We have decided to progress this technical change and are looking to implement it in 2020. Before doing so, we need to seek feedback on two remaining matters:
- Defining when a wastage claim can be submitted (the subject of this consultation);
- Revising the list of products for which wastage is funded (to be addressed in early 2020).
This proposal outlines some proposed changes to the Schedule rules relating to wastage funding, which would clarify the situations in which a wastage claim would be funded for community pharmacies.
Consultation closes at 5 pm on Friday, 20 December 2019 and feedback can be emailed to firstname.lastname@example.org.
What would the effect be?
The proposal would give greater clarity around when a wastage claim should be submitted. The current arrangements have led to confusion around when pharmacies can and should submit a wastage claim, which has previously resulted in a significant level of over-claiming of wastage funding for some products.
The proposal would mean that wastage claims would be able to be made where either:
- a reasonable amount of time has elapsed since the product was last dispensed, or
- that the partial pack is unlikely to be able to be dispensed in the near future, because of expiry or impending delisting from the Schedule, or
- the amount left in the pack is too small a quantity to be practically useful in a future dispensing (e.g. after dispensing 28 from a pack of 30).
Who we think will be interested
We think people who are involved in the provision, dispensing and reimbursement for funded pharmaceuticals could be interested. We expect that this proposal will be of particular interest to community pharmacists, pharmacy dispensary software providers and pharmaceutical suppliers.
About wastage reimbursement
Community pharmacies are contracted by District Health Boards to dispense medicines that are listed in the Pharmaceutical Schedule. At times, the amount of a medicine that is prescribed, and therefore dispensed, does not always align with the pack size of the item that is subsidised, which means that part of a pack may be left over after the dispensing. For commonly-used medicines, this part-pack will likely be used in the preparation of another dispensing, but in other cases this will not be possible.
We reimburse community pharmacies for the cost of unused part-packs that are subsequently discarded (“wastage”) for specific products. Wastage differs from ‘original pack’ (OP) dispensing, in which an entire pack is dispensed to the patient because it is impractical to do otherwise, such as with inhalers, eye drops or tubes of cream.
Wastage reimbursement was originally limited to oral liquid antibiotics, where a whole bottle is reconstituted, and the undispensed portion is discarded because of short shelf-life following reconstitution. The claim for wastage then occurs as part of the claim for the dispensed dose.
Over time, we have extended wastage funding to other products, such as high cost tablets (e.g. lenalidomide) and injections (e.g. epoetin alfa). These products don’t have the same stability issues as oral liquids, however wastage, if claimed, must still be claimed as part of the dispensing. This creates a situation where pharmacists need to predict whether they will have future dispensings of these products, or if they should discard the product and claim for wastage.
Why we’re proposing this
Over time, more high cost medicines have been listed in the Schedule and dispensed from community pharmacies. These make up a relatively small proportion of the medicines dispensed each year, but they can have a significant financial impact on a pharmacy if a part-pack remains on the shelf.
PHARMAC wants to support patients accessing medicines from their preferred pharmacy, and this means that we need to ensure that pharmacies are not subject to significant financial risk from dispensing part packs of high cost medicines.
We are looking to improve how wastage is funded, to better align with its use for shelf stable products, and are doing this in three parts:
- Changing how wastage claims are made.
- Revising the rules around when a wastage claim can be made.
- Updating the list of products for which wastage would be funded.
Details about our proposal
The General Rules of the Pharmaceutical Schedule would be amended to provide clarity on the situations under which a wastage claim could be made, as below (additions in bold, deletions in strikethrough).
These changes would be implemented at the same time as the technical changes that are still in progress, which we expect to be during 2020. A more precise implementation date would be notified to interested parties as soon as we are in a position to do so.
6.4 Wastage and Community Pharmaceuticals: Wastage may
onlybe claimed where a pharmacy has partial pack remaining after dispensing a Community Pharmaceutical is prescribed or ordered by a Prescriber in an amount that does not coincide with the amount contained in one or more standard packs from which that Community Pharmaceutical has been dispensed, provided that the following requirements are met:
6.4.1 The Pharmacist must minimise wastage by reducing the amount dispensed to make it equal to the quantity contained in a whole pack where:
- the difference between the amount dispensed and the amount prescribed or ordered by the Prescriber is less than 10% (for example, if a Prescription is for 105 ml then a 100 ml pack would be dispensed), and
- in the reasonable opinion of the Pharmacist the difference would not affect the efficacy of the course of treatment prescribed or ordered by the Prescriber.
6.4.2 Wastage may only be claimed by the Pharmacist
at the time of dispensingfor a Community Pharmaceutical that is one of the following:
- an oral liquid antibiotic that requires a diluent at the time of dispensing (unless the brand is specifically excluded), or
- an Unapproved Pharmaceutical supplied under section 29 of the Medicines Act 1981, but excluding any medicine listed as “Cost, Brand, Source of Supply”, or
- any other Pharmaceutical that PHARMAC determines and identifies as wastage claimable in the Schedule.
6.4.3 Wastage may only be claimed for a Community Pharmaceutical when, in the reasonable opinion of the Pharmacist, the partial pack is unlikely to be usable in a subsequent dispensing, and if one of the following circumstances applies:
- It has been 9 months or more since the last dispensing of the Pharmaceutical in the pharmacy, or
- The partial pack equates to less than 10 percent of a standard pack, or
- The Pharmaceutical has less than 3 months before expiry (including where it has shortened expiry due to opening the pack or reconstituting the Pharmaceutical), or
- The Pharmaceutical is to be delisted from the Pharmaceutical Schedule in the next three months.
6.4.4 Any residual product which is subject to a wastage claim must be discarded and must not be used for subsequent dispensing. Intentionally reusing product for which wastage has been claimed is likely to be an act of fraud.
6.4.5 At the time of dispensing, the Pharmacist must keep a record of the quantity discarded if wastage is claimed.
To provide feedback on this consultation
Send us an email: email@example.com by 5 pm, 20 December 2019.
All feedback received before the closing date will be considered by PHARMAC’s Board (or its delegate) prior to making a decision on this proposal.
Feedback we receive is subject to the Official Information Act 1982 (OIA) and we will consider any request to have information withheld in accordance with our obligations under the OIA. Anyone providing feedback, whether on their own account or on behalf of an organisation, and whether in a personal or professional capacity, should be aware that the content of their feedback and their identity may need to be disclosed in response to an OIA request.
We are not able to treat any part of your feedback as confidential unless you specifically request that we do, and then only to the extent permissible under the OIA and other relevant laws and requirements. If you would like us to withhold any commercially sensitive, confidential proprietary, or personal information included in your submission, please clearly state this in your submission and identify the relevant sections of your submission that you would like it withheld. PHARMAC will give due consideration to any such request.
Feedback on previous consultation
We’re grateful for the time people took to respond to our previous consultation on the technical changes to how wastage funding works.
- Some responders were supportive of the proposal overall. One considered that there was not enough detail to form a specific view. We note that this new consultation should assist with assessing the overall impact of the proposed changes.
- We received some feedback suggesting that if pharmacies were able to buy and sell excess stock, a wastage claiming mechanism would not be needed. We note that this would not fully negate the need for wastage funding to exist, and that any such activity would need to be compliant with the Medicines Act 1981.
- Some responders provided suggestions as to when a pharmacy should be able to submit a wastage claim. We have considered these suggestions as we have developed this most recent proposal.
- We also received requests for wastage funding (or Original Pack dispensing) to be applied to specific products. We have noted these suggestions and will take these into consideration when we revise the list of products to which wastage funding or Original Pack dispensing would apply.
Last updated: 27 November 2019