Effect of fundholding and indicative prescribing schemes on general practitioners' prescribing costs

OBJECTIVE--To compare general practitioners' prescribing costs in fundholding and non-fundholding practices before and after implementation of the NHS reforms in April 1991. DESIGN--Analysis of prescribing and cost information (PACT data; levels 2 and 3) over two six month periods in 1991 and 1992. SETTING--Oxford region. PARTICIPANTS--Three dispensing fundholding practices; five non-dispensing fundholding practices; and seven non-dispensing, non-fundholding practices. MAIN OUTCOME MEASURES--Percentage change in net cost of ingredients, number of items prescribed, average cost per item, and proportion of generic drugs prescribed after NHS reforms. RESULTS--Prescribing costs increased in all practices in the six months after the reforms. The net costs of ingredients increased among dispensing fundholders by 10.2%, among non-dispensing fundholders by 13.2%, and among non-fundholders by 18.7%. The number of items prescribed also increased in all three groups (by 5.2%, 7.5%, and 6.1% respectively). The increase in average cost per item was 4.8% for dispensing fundholders, 5.3% for non-dispensing fundholders, and 11.9% for non-fundholders. Dispensing fundholders increased the proportion of generic drugs prescribed from 26.9% to 34.5% and non-dispensing fundholders from 44.5% to 48.7%; non-fundholders showed no change (47%). Five of the eight fundholding practices made savings in their drugs budgets at the end of the first year of fundholding (range 2.9-10.7%; the three other practices overspent by up to 3.6%). All non-fundholding practices exceeded their indicative prescribing amounts (range 3.2-20.0%). CONCLUSIONS--Fundholding has helped to curb increases in prescribing costs, even among dispensing general practitioners, for whom the incentives are different. Indicative prescribing amounts for non-fundholding practices do not seem to have had the same effect.