The system which causes branded generics to undercut generic prices in the Category M basket of medicines requires urgent revision, The King's Fund has recommended.

Category M was introduced into the Drug Tariff in 2005 when the new community pharmacy contract was launched and is used to adjust the reimbursement prices of over 500 medicines. However, according to a new inquiry paper published by the health policy think tank, the current system can perversely encourage switching from generic prescribing back to brand prescribing which, it says, is counter to years spent encouraging generic prescribing as a principle and is also confusing for patients.

The inquiry paper looks at the quality of GP prescribing, and in their examination of issues surrounding value for money the authors say they have found general agreement that GPs do consider cost when making drug choices. However, they also believe that more can be done to flag up cost implications at the time of prescribing and that, therefore, systems need to be developed to enable GPs to be more cost-aware in their prescribing choices.

Patients also need to have greater understanding of the cost of medicines, the report goes on, and the authors suggest that drug wastage by patients could be reduced if the costs of the medications which they are receiving were made explicit to them.

Moreover, "consideration should be given to research to see if medication adherence can be improved by labelling prescriptions with the cost to the NHS," they propose.

While the switching of medicines to reduce costs is accepted by patients, they need to have the reasons communicated to them explicitly and carefully, under agreed operating procedures, and if patients are unhappy or concerned they must have ready access to the prescriber, the report says.

Prescribing support software such as ScriptSwitch - which links to GP clinical systems to provide prescribers with local formulary choices and advice on the latest cost-saving, safety and effectiveness issues relating to medicines - has an important role, and should be supported as an example of intelligent "decision support," it goes on.

The authors also call for the eLearning for Healthcare Prescribe project - whose funding has now been withdrawn as part of the government's financial cuts - to be reinstated. In the view of the King's Fund authors, the project was a vital development to ensure better education of medical students and young doctors and to encourage them to be better and safer prescribers and was, they say, “highly likely to be cost-effective.”