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General Medical Services (Payments) Board -2003 Supplement to Audit Report

General Medical Services (Payments) Board -2003 Supplement to Audit Report

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General Medical Services (Payments) Board -2003Supplement to Audit ReportIssues
of
Governance
During the course of the 2003 audit of the General Medical Services (Payments)Board (the Board) issues arose which gave rise to concerns in relation to thegovernance
of
the High Tech Drug Scheme and the Dispensing Doctors Scheme. Iraised these matters with the
Chief Officer of the
Board and his responses have beenincorporated in this supplement.
1. High Tech Drug Scheme
In 2003 the Board incurred expenditure
of
€106.8m on the High Tech Drug Scheme.This expenditure is recorded in Note 6 to the Board's Financial Statements. It consists
of payments of
€5.5m to 1145 pharmacists in respect
of
patient care dispensing feesand €101.3m to 13 drug wholesalers
for
the supply of the drugs to the pharmacists.In previous years I drew attention in my audit reports to the fact that the value ofstocks on hand, as recorded in the annual financial statements, was not reliable. Thiswas due to the Board not having proper stock controls and stocktaking procedures forthis scheme. As part
of
this year's audit I examined the payments being made to thewholesalers under this scheme. This report highlights the lack
of
controls in place inregard to acquisition, stock control and recording of high tech drugs.
The Scheme
A wide range
of
expensive high tech medicines may be prescribed to patients on theirdischarge
from
hospital, such as anti rejection drugs
for
transplant patients, medicinesused in conjunction with chemotherapy and growth hormones. Prior to theintroduction
of the
current scheme, such drugs were dispensed to the patients throughhospitals or health boards, which often involved patients travelling long distances tocollect their medicines. The present scheme was introduced in November 1996 so asto enable patients to obtain their medicines
 from
 community pharmacists. The schemeis confined to drugs which are on a list approved by the Department
of
Health andChildren (DOHC).Patients prescribed the high tech drugs are asked to nominate a community pharmacy
of
their choice. The Health Board Liaison
Officer
advises the nominated pharmacist
of
the patient's requirements. The pharmacist then orders and takes delivery
of
therequired drugs
 from
 his wholesaler and dispenses these drugs to the patient.Each month the pharmacists submit their High Tech dispensing claims together withsupplier delivery dockets to the Board. The Board pays them a monthly patient carefee of €49.64 per patient. The Board records on a monthly basis details of thedispensing
fee
and the quantity and type of drug dispensed by each pharmacist.
 
The wholesalers send their invoices
for
the ingredient cost
of the
drugs to the Boardby the 2nd day
of
each month in respect
of
deliveries made the previous month. TheBoard is contractually obliged to pay these invoices by the 6th day of each month.The Board deducts an agreed 5% discount on invoices it receives from wholesalers
for
the supply
of
high tech drugs to the pharmacists. The Board pays the wholesalerinvoices prior
to
receiving the corresponding delivery dockets
from
the pharmacists.The Board then bills the relevant Health Board with the ingredient cost
of
the drugsdispensed inclusive of VAT, where applicable, less the 5% discount.
Cost
of
the Scheme
The cost of the scheme has increased significantly each year since it was introduced inlate 1996. The following table shows the increase in costs each year from 1997 andthe value of High Tech Drugs on hand as recorded in the Board's FinancialStatements.
High Tech Drugs SchemeEstimatedExpenditure% IncreaseValue ofYear
Over 1997ClosingStock
199727,212,5311,473,3901998 33,715,059 242,177,0681999 42,303,174 552,177,0682000 50,505,842 86 3,570,1542001 63,791,527 134 4,127,7512002 83,432,337 2075,696,6642003106,818,906 2938,014,825The expenditure in
2003
of €107m represents 7% of the Board's total expenditure
for
the year. The projected expenditure on the scheme for 2004 is set to increase to€140m. Also, commensurate with the increase in the annual expenditure there hasbeen an increase in the value of the stocks on hand at the end of each year.The main cost drivers
of
the scheme are the ingredient cost
of
the medicines, thenumber and the type
of products
authorised
for
reimbursement under the scheme, thenumber
of
patients to whom such products are prescribed and the number
of
itemsprescribed. The drugs range in price
 from
 €20.79 to €7,951.22 per pack. At year-end2003 there were 225 items approved
for
dispensing which included 11 new products(new chemical entities) introduced in 2003.
 
Audit Findings
While delivery dockets in respect
of drugs
received by pharmacists
 from
heirwholesalers are submitted with their monthly dispensing claims for patientcare fees there was no cross check, by the Board,
of
these delivery docketsagainst the invoices submitted by the wholesalers
for
payment. The Board hadno arrangements in place to enable it to establish that drugs invoiced and paid
for
are, in
fact,
being delivered to the relevant pharmacists.The Board records, on a monthly basis, the dispensing fee and the type andquantity of high tech drugs dispensed by each pharmacist. The Board haspointed out that the returns
 from
 pharmacists
of
drugs dispensed may not becomplete. This is because once a pharmacist has claimed
for
a dispensing feein respect
of
a patient in any particular month, there is no incentive to returndetails of any
further
dispensing to that person in the same month.The Board also has no system in place to record the type and quantity of drugsordered and taken into stock by each pharmacist. Therefore, there is nomonitoring or reconciliation
of
stocks held and dispensed by the pharmacistsduring the year or reconciliation to the amount stated in the annual financialstatements.It is an inherent feature
of
the scheme that there will be some unavoidableelement
of
wastage. All
of
the drugs acquired by a pharmacist may not beused,
for
instance where a patient's prescription is changed and the pharmacisthas no other patient requiring the original drug. Wholesalers are not obliged totake returns
of
stock and some high tech drugs with a short
life
may go out ofdate while in stock. As the Board has not got proper monitoring or stockcontrol procedures in place it is not possible to determine the level, cause andcost of wastage.In response to my enquiries the Board carried out a financial exercise, whichcompared the cost
of drugs
purchased with the cost
of the
drugs dispensed forthe years 2000 to 2003 inclusive. It estimated that there is a difference of€23m between the amount purchased and the amount recorded as dispensed,after taking account of end of year stocks. According to the Board thisdifference is accounted for partly by wastage, partly by late claims frompharmacists and partly by the fact that returns
 from
 pharmacists may not becompleted correctly or not returned at the year-end.As I considered that the controls in place over the acquisition, stock control and therecording of high tech drugs dispensed under the High Tech scheme were notadequate and in view
of the
significant increase in expenditure since the inception ofthe scheme, I sought the
Chief Officer's
views and details
of
any corrective action heintended to take to improve matters.

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