The department was warned twice last year that its method of paying dispensing chemists was inefficient, and that there was scope for savings on professional dispensing fees, which are expected to exceed pounds 630m in England alone during the current financial year.
According to the Commons Public Accounts Committee, the current payment system 'gives indiscriminate support to low volume, high cost' pharmacies.
But Sir John Bourn, the Comptroller and Auditor General, was even more scathing in a report issued last May. He said that at least half of the pharmacists working in 9,750 chemists' shops in England were dispensing 'well below the volume . . . at which pharmacists dispense most efficiently'.
The problem was created by a two-tier fee structure under which chemists were paid more than pounds 1.59 for each prescription item dispensed for the first 1,700 items a month - and only 80.5p for all items in excess of 1,700 a month.
Sir John's National Audit Office (NAO) said the system supported 'a large number of small pharmacies, whose dispensing costs are on average higher than that of the large pharmacies, and many of which contribute little to the accessibility of the service'.
The Treasury revealed this month that the Department of Health and the Pharmaceutical Services Negotiating Committee had agreed on the principle of a flat-rate payment recommended by the audit office.
An NAO survey of Camden and Islington, in north London, discovered that 55 chemists' shops - almost half the total - were in clusters of three, within 300 metres of each other. On average they each dispensed 17,763 items in 1990-91. The first 20,400 items attract the premium rate.
In Lancashire, it was calculated that 77 of the county's 305 NHS pharmacies could be closed without compromising the service.
'The model suggests that, in Lancashire, savings of 8 per cent of the cost of the service could be achieved without compromising access significantly,' the report said. If that 8 per cent saving was reflected nationally, the closure of a quarter of the 9,750 chemists' shops in England would save the Exchequer more than pounds 50m.Reuse content