HSE alleges fraud over phased dispensing fees

The provision of medicines to medical card holders is big business for pharmacies: in 2013, the HSE paid more than €320 million to the sector in dispensing fees.

Most of this is accounted for by a standard dispensing fee per item of €5, which drops slightly as the number of items dispensed by a pharmacy per month exceeds 1,600.

However, there is also a phased dispensing fee of €3.27, and this lies at the heart of the current dispute between the HSE and the State’s biggest pharmacy chain, LloydsPharmacy Ireland.

The company has grown through a policy of aggressive expansion. Formerly known as Unicare and then DocMorris, it rebranded as Lloyds in 2013 and now runs more than 90 pharmacies throughout the Republic and employs 1,000 people.

Last June, it announced plans to open another 60 stores, employing an additional 500 staff. It has also diversified into the online doctor business.

The chain is owned by a German company, which in turn is owned by a US firm.

Phased dispensing is used to prevent excessive or incorrect dosing by the patient. The idea is that instead of giving patients a month’s supply of their tablets, they are given one week’s supply at a time. The patient or a family member visits the pharmacy weekly, and the pharmacist can check on their adherence to their medication.

Overconsumption

It had been found that some patients, such as older people or drug addicts, were prone to overconsumption of their medicines. Sleeping tablets and other pills supplied to drug addicts were also more likely to end up on the black market when dispensed monthly.

As far as the HSE is concerned, fees are paid on a phased basis only when the patients return to the pharmacy after a period to receive more medicines.

But the industry's interpretation of fee rules seems to vary. A number of smaller pharmacies contacted by The Irish Times said they never claimed a phased dispensing fee unless the patient or a relative came to collect medicine after a time interval.

However, one industry source claimed Lloyds was acting no differently from any other group.

Lloyds operates a system it calls MyMed, which, in the case of a 28-day drug supply, involves putting a patient’s medication into four separate compartmentalised trays, one for each seven-day period. These are supplied to a patient in a single visit to the pharmacy.

Based on this system, Lloyds claims the initial fee of €5 and three more weekly fees of €3.27 each.

It is clear from internal Lloyds documents that the pharmacy chain has been promoting the use of MyMed in its branches because of the financial advantages that flow from phased fees. In one document, it claims this results in the payment of greatly increased fees from the HSE.

Lawyers for Lloyds have criticised the HSE for alleging fraud and breach of contract in a letter sent to the chain’s managing director Goretti Brady earlier this month.

In its replying letter, Lloyds called on the HSE to withdraw the “entirely unfounded” allegation for which no substantiation had been offered.

Drug costs

The Government has made some progress in cutting the cost of drugs to the State and individual patients, but more needs to be done. Minister for Health Leo Varadkar has identified lowering drugs costs as one of his priorities for the next year.

Some in the industry will see this dispute as an attempt by the HSE to save money by paving the way for the abolition of phased dispensing fees. But notwithstanding its unhappiness on the issue, the HSE continues to pay the fees to Lloyds and new stores in the chain continue to be licensed.

It may well fall to the courts to sort out the differences between the HSE and Lloyds on fees.