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Guidance on expensive items

NPA Essential

Guidance on expensive items

The NPA’s Check34 resources for members in England cover 14 KPIs. Below is an extract from our KPI guidance notes on Expensive Items

An expensive item is any item (drug or appliance) that has a net ingredient cost (NIC) equal to or over £100.

Cash flow

Normally, contractors only receive full re-imbursement three months after NHS prescriptions are dispensed (two months after submission). Although payment terms may vary between different wholesalers/suppliers, most pharmacies would be expected to clear payment for any orders placed within a short space of time.

A three month delay in NHS reimbursement can significantly affect pharmacy cash flow, particularly in those months where several high value items are ordered and dispensed.

Note: Contractors signed up to the Pharmacy Earlier Payment Scheme (PEPS) are able to receive earlier access to their monthly advance payment.

Average item value (AIV)

The average item value is calculated using the total of drugs and appliance costs plus fees, less the value of MURs, NMS and AURs, divided by the total number of professional fees received by the pharmacy. Fluctuations in AIV can have a huge impact on pharmacy cash flow. A large number of expensive items dispensed in a single month can increase the AIV which in turn can increase the level of advance payment a contractor receives.

On the other hand, a lower AIV can result in a reduced advance payment received by the contractor which may not help cover the costs of ordering very expensive items in the current dispensing month.

Local funding

Some Local Area Teams (LATs) operate an early funding scheme to allow contractors to apply and claim for, in advance, payment for expensive items dispensed. If a claim is approved, the LAT will make the payment on their Local Payment Application.

Contractors will need to submit their expensive item prescriptions for payment as normal (using the red separators). Any advance which has been paid is recovered when the payment for the item goes on to the Schedule of Payment.

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NPA Essential