Category M is used to adjust the reimbursement prices of over 500 medicines.
Category M reimbursement prices are largely based on information gathered from manufacturers about factory gate volumes and prices. In addition, information on dispensing volumes is gathered from the NHS BSA Prescription Pricing Division. From this, supply chain margins are calculated.
Following negotiations with the PSNC, the total reimbursement amount is adjusted based on estimated volumes and Category M prices are revised on a quarterly basis.
The built in correction mechanism adjusts for any under and over recovery as volumes vary from what was estimated.
It is the principal price adjustment mechanism to ensure delivery of the purchase profit income promised as part of the new pharmacy contract.