The Scottish Government

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SECTION 2: BACKGROUND

NHS prescription charges and exemptions

2.1 Prescription charges were first introduced in 1952 for patients in the community and, except for a three-year period between 1965 and 1968, have been levied ever since. The flat rate prescription charge has historically been viewed by UK Health Departments as a reasonable amount to be paid (by patients who can afford to do so) for prescribed drugs and/or appliances.

2.2 The current flat rate prescription charge in Scotland is £6.50 per item dispensed. It has risen by 10 pence increments since 1999-00 . For patients who need many or frequent prescriptions, a more affordable option is to purchase a pre-payment certificate ( PPC). PPCs can be cost effective where a patient needs more than 5 items in a four month period (for which the charge is currently £33.90); and where the patient needs more than 14 items in a twelve month period (current charge £93.20).

2.3 Prescription charges are intended as a contribution towards the cost of the NHS, on the basis that some form of co-payment sends a clear signal that this is a valued service. The £6.50 charge and PPC rates do not therefore relate directly to the cost of the prescribed item or the cost to the NHS of supplying it.

2.4 In Scotland in 2004-05, the cost of providing pharmaceutical services from community pharmacies, and by dispensing doctors and appliance suppliers was £982 million. Of this, £859 million was the cost for medicines and appliances, and £123 million was spent on remuneration for pharmacists, dispensing doctors and appliance suppliers. For the same period, prescription charges, including the sale of pre-paid certificates, totalled £44.4 million, which is 4.5% of the cost of pharmaceutical services and around 1% of NHS Boards' total revenue budget.

2.5 There are NHS prescription charge exemption arrangements designed to protect those who are most likely to have difficulty paying charges. It is estimated that around 50% of the population qualifies for free prescriptions under the current exemption rules. However, because this group includes the elderly, who are high 'users' of medicines, over 90% (68 million) of items dispensed in Scotland are supplied to the patient free of charge.

2.6 A person can qualify for exemption or remission of charges for three main reasons - age, financial status or medical condition. The following is an analysis ¹ of the volume of exempt prescription items that these and other categories of exemption account for.

* Includes where the exemption category unknown or where more than one exemption category has been ticked on the form.

2.7 The list of chronic medical conditions that confer exemption from charges was agreed with the medical profession in 1968. The criteria for placing conditions on the list at that time were that they must be easily recognisable, lifelong and life threatening. All required regular, prescribed medication. It is also the case at present that anyone who qualifies for exemption because they have a chronic condition does not have to pay for any prescriptions - whether the prescription relates to the chronic condition or not.

2.8 A fuller summary of the current prescription charge and exemption policies, including the list of those medical conditions that currently exempt the patient from paying any prescription charges, is at Annex B.

Policy Context

2.9 The Executive's policy position remains that patients who can afford to do so should make a contribution to the costs of prescribing and dispensing; it provides a means by which patients can place a value on the medicines that they require, contributes to efficient prescribing practices and helps to reduce the level of less urgent demands on GPs' time.

2.10 However, the Executive has also acknowledged that the current charge and exemption arrangements as a whole contain anomalies. It was this recognition that led the Executive to make a commitment under the Partnership Agreement to a review of prescription charges for people with chronic medical conditions, and young people in full time education.

2.11 Since making that commitment there have been a number of developments that are relevant to the review, namely:

• The Executive's October 2005 publication of Delivering for Health that sets out a programme of action for NHS Scotland to the end of this decade.
• The phased abolition of prescription charging in Wales has raised the possibility of complete abolition of charges here in Scotland.
• The Scottish Parliament's Health Committee has considered a Member's proposed Abolition of NHS Prescription Charges (Scotland) Bill.

Charge Abolition

2.12 The Executive has not supported the Bill to abolish prescription charges and considers that, on the basis of the evidence presented to the Committee, the case against abolition is in fact strengthened. Annex C sets out in more detail the possible implications of abolishing prescription charges in Scotland. However, the evidence did highlight the position of those on low incomes and the possible consequences of any difficulty or inability they may have in paying for some of their medicines. Therefore, rather than focusing on abolition of charges across the board, which would benefit both those in the higher and lower income brackets, the Executive is taking the opportunity of this review to address the affordability of medicines with particular emphasis on those with higher medication needs.

Delivering for Health

2.13 One of the overarching themes of Delivering for Health is a shift in the balance of care from a reliance on episodic, acute care in hospitals, to an approach where the focus is on promoting good health and preventative medicine, through support for self care, and through greater targeting of resources on those at greatest risk. Delivering for Health also emphasises the need to give priority to tackling health inequalities. A key driver in delivering these policies will be the primary care team, with more health care being provided locally in GP practices and community pharmacies. It is very important to consider possible changes to the charges and exemption regime in this context and to ensure that any changes are consistent with, and support, the strategic direction set by Delivering for Health.

The Position in Wales

2.14 The Welsh Assembly Government's policy is to make prescriptions free of charge in Wales by 2007. In 2001, prescription charge exemption was extended to all young people up to the age of 25, and charges were frozen at £6 per item. As of October 2004 the charge fell to £5 and then to £4 in April 2005. A further £1 reduction is planned for April 2006.

2.15 The Executive is not aware of analysis undertaken prior to implementation of the policy to consider its financial impact. The Welsh Assembly has allocated annual budgetary increases to its Health and Social Care Department so that NHS Wales has not had to absorb the loss of prescription income. That budget is planned to reach £32.2 million in 2007 and takes no account of any possible increased costs or savings - to date there is no hard evidence of either and this is not expected to emerge until the charge has actually been abolished.

2.16 The most contentious issue arising from implementing the policy so far has been surrounding cross-Border activity, whereby patients resident in Wales but registered with a GP in England are unable to access a Welsh prescription and thereby benefit from the reduced charge (when it is dispensed in Wales). The situation for patients resident in England but registered in Wales means that conversely they are able to benefit. At the time of producing this document the Welsh Assembly Government has still to resolve this issue. From a Scottish perspective the point to bear in mind is that in developing any new charge and exemption arrangements it will be necessary to address and resolve possible cross-Border issues.

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