Product Premium Pricing

Some products, such as special foods, are only partially subsidised and require patients to pay a part charge known as a product premium. In the example below:

• When endorsed, the product is fully subsidised, indicated by the Endorsed PS Price field being equal to the Std W/S price.
• It is not subsided at all without either a Special Authority or endorsement because the Standard PS Price field is 0.00.
• If the patient has a Special Authority, then the product is only partially subsidised (the Special auth. PS Price is less than the Std W/S price) and will have to pay the Pharmacy PP price.

The figures in the example above are derived from:

1. Std W/S price: The Pharmac Schedule manufacturers price + 10% (historical lift) ex. GST
2. PS Price + Endorsed: The Pharmac Schedule endorsed subsidy price + 10% (historical lift) ex. GST
3. PS Price + Special auth.: The Pharmac Schedule partial subsidy + 10% (historical lift) ex. GST
4. Product prem. + Special auth.: Toniq’s indicative product premium, which is the difference between the standard wholesale price and the partial subsidy price + 50% + GST. In this example the calculation would be:
   • (1.94 - 0.79) + 50% + 15% = 1.15 + 0.575 + 0.25875 = 1.98375
     which equals the examples 1.98 with rounding down to 2 decimal places.
5. Pharmacy PP: The product premium charged by the pharmacy and is calculated as above, but using the percentage markup set in 7. Administration > 1. Setup > 4. Standard price parameters and is unique to each pharmacy.

Changing the Product Premium

Gobal setting

The pharmacy's Premium markup is set in 7. Administration > 1. Setup > 4. Standard price parameters. This adjusts the cost to the patient, i.e. the Pharmacy PP, to the required percentage markup for all items with a product premium, taking into account the Rounding setting:

Individual products

The Product prem. may be adjusted on an item to set the Pharmacy PP to the required amount.

If this is done, it is suggested that one of the Updates options is ticked on page 3 of the stock-card, i.e. No PP, so that the medicine file does not over-write the manually adjusted product premium.

Note: If a no updates option is selected on any medicine, Toniq recommends running 3. Reports > 3. Medicine reports > 2. User maintained medicines, selecting No PP updates (for this example), monthly to check that the product premium is still appropriate for each of those medicines with No PP ticked.

Notes

The source of standard wholesale price is from the Pharmac Schedule’s manufacturer’s price, not the invoiced cost from the wholesaler.

It is not recommended that any prices on  subsidised medicines are changed on its stock-card so that the Toniq program can calculate subsidy pricing correctly. However, if changes are made, the claiming system will pay according to the Pharmac Schedule pricing, not to prices submitted by the pharmacy.

The only time the Std W/S price should be changed is when an item is to be priced Cost Brand Source (CBS) such as NPPAs. Otherwise, it is not recommended that the Std W/S price or any PS price be changed. Those prices are updated monthly by Toniq in line with the Pharmac Schedule Update and occasionally with mid-month listings.