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Dispense with dependence

9 February 2013

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Proposed changes to the GP contract from 2013 raise significant concerns for all GP practices, and particularly those based in rural areas. Deprivation-based funding formulae are tricky to get right, particularly in rural areas where deprivation is much less concentrated and often less conspicuous than in urban areas. Dispensing Doctors’ x (DDA) vice chairman Dr Allan Tennant recently summed up the challenge for rural practices, saying that “this can make it more difficult for service funding organisations to identify and address the associated need.”

Faced with the prospect of possible contract imposition, many GP practices will be considering ways to secure their own future by finding alternative sources of income. For many, thoughts may turn to opening a dispensary. 

GP dispensing is not a new concept; GPs have been dispensing for centuries, and it is a service that remains popular with patients to this day. A survey by the DDA conducted in 2008 suggests several reasons why patients might prefer to get their prescriptions from a dispensary: 



  • Trust in the GP: this finding was confirmed recently by the Department of Health’s 2011-12 GP patient survey which reported that patients living in PCTs with rural areas show higher than average confidence and trust in their GP and higher than national average involvement in decisions about their care. 
  • Advantage of being known by doctors and staff.
  • Local difficulties regarding cost and availability of transport.


The survey also asked patients of non-dispensing practices a key question: “Would you like to be able to choose where you have your prescriptions dispensed?” The response was an overwhelming “yes”. 


Rural accord

Regulations attempting to engender the peaceful coexistence of pharmacies and dispensing doctors have been in existence since 1911. The most recent incarnation of these regulations is the 2012 NHS (pharmaceutical services) regulations (see Box on p36), which dictate, among other things, where practice dispensaries can open, and which patients may use them. The rules are complex and home-country specific. 

In England and Wales, the basic tenet of the regulations is the ‘one-mile rule’ that stipulates that a practice may open a new dispensary only in an area that has been determined as ‘controlled’ (rural) by the local primary care commissioning organisation, and if the new dispensary will be located more than a mile away from the nearest pharmacy. The rules also stipulate that patients may then request dispensing services from that practice (assuming the dispensary application is successful) only if they live more than one mile from a pharmacy. 

Scottish regulations (revised in 2011) do not make any provision for the ‘one-mile’ rule and practices cannot choose to dispense; instead practices may be requested to dispense by the local health board following the board’s determination that patients would have serious difficulty obtaining their drugs, medicines or appliances from a pharmacist due to:


  • Distance.
  • Inadequacy of means of communication.
  • Other exceptional circumstances. 



Opening a new dispensary

For reasons best known to the architects of the rural accord, the regulations on both sides of the border deliberately make it hard to open a new dispensary. As a result, data published by the NHS Business Services Authority (NHSBSA) show that the number of dispensing practices open in England has fallen every year since 2005 – also the year in which the most current pharmaceutical services regulations were first laid. Since 2005, 93 dispensing practices have ceased dispensing – or 7.8% of the total number of dispensing practices in operation in 2005 – 32 of which ceased dispensing in the past year. 

Currently, there are 1,086 dispensing practices in England which dispense to 3.34 million patients. That’s 140,000 fewer dispensing patients than were benefitting from the practice dispensing service in 2005. The explanation for this decline is available [online] at the DDA (see Resources). However, with a bit of geographical fortitude and a lot of grit and determination, practice dispensaries can still open; in fact, the first new dispensary for four years opened in September this year in the Wrexham village of Bangor-On-Dee. Summing up the key reason for sticking with an application that took three years and survived two pharmacy counter-applications, Overton Medical Centre practice manager James Eastop says that income from dispensing provides vital respite from the financial pressures on GPs. He says: “Dispensing profits will be used to improve patient services, particularly, the practice’s nursing capacity.”


Opening pharmacies

For practices located in less rural (non-controlled) areas, or for existing dispensing practices in areas where population growth may make a new pharmacy viable, an option available to GPs is to open a pharmacy. Again, the relevant home country’s NHS Pharmaceutical Services Regulations will detail the circumstances in which a pharmacy may open. 

Working collaboratively with a pharmacy offers the GP practice and its patients a host of benefits: access to a healthcare professional specifically trained in medicines; collaborative, informed prescribing and dispensing (easing workload and benefitting patients); access to pharmacy-only medicines optimisation services (medicines waste reduction benefits) and additional income streams relating to the community pharmacy contract and from retail (non-NHS) sales. 

Costs and profitability

In terms of costs, the major expenditure areas for any dispensary are the cost of stock and staff salaries. To operate, a pharmacy must have a superintendent pharmacist. According to the 2012 salary survey conducted by pharmacy magazine Chemist and Druggist, full-time superintendent salaries start at £48,750. Practice dispensaries, however, may be operated by trained dispensers (non-pharmacists).Pharmacy premises must conform to standards set by the regulator for pharmacy, the General Pharmaceutical Council, while for practice dispensaries, the Dispensing Services Quality Scheme applies. (For further details of both, see Resources). The pharmacy may also be located in separate premises, where separate premises costs will apply (heating, lighting, security, insurance, business rates, rent/mortgage/loan payments). 

A new pharmacy/dispensary may also require a shopfit. While the amount of capital tied up in stock will vary according to the dispensing activity being done, an average dispensary should expect to dispense around 6,000-6,500 items a month. The profitability of this dispensing will depend on the discounts obtained, the practice’s own business cost-efficiencies, minus the nationally negotiated NHS deductions (clawback/abatement) that apply. All dispensaries need to bear in mind that purchase margins are under pressure – some to the point of moving into a loss – while the costs attributable to dispensing are increasing. As a guide to per item costs of dispensing, a 2011 inquiry calculated the cost of delivering an NHS pharmaceutical service in pharmacies to be around £3.03-£3.06 for every item dispensed. 

All this suggests it is neither a quick, easy nor cheap decision to open either a practice or pharmacy dispensary, but for those that achieve that aim, the benefits for practices and patients can be significant. A wise practice will take advice from GPs who already dispense and take advantage of any regulations-based training they can find. For more information on how the DDA can help, visit: 


Matthew Isom is chief executive of the Dispensing Doctors Association.



Dispensing Doctors Association

Department of Health’s 2011-12 GP patient survey 

Campaign to give all patients the right to choose where they have their prescriptions dispensed and

Explanation of decline in dispensing practices

General Pharmaceutical Council

Dispensing Services Quality Scheme