Some dispensing practices are offering medicines at a loss because of discount arrangements unchanged since the 1990s, the Dispensing Doctors Association (DDA) has warned.
Dr David Baker, DDA chief executive, said that the profitability of dispensing practices has taken 'a severe knock'.
'If the situation does not improve, the financial viability of the dispensing service will be severely threatened,' he said.
Dispensing practices are reimbursed for the cost of the medicines they provide. But the government claws back an average of 11 per cent, a level negotiated in the mid-1990s.
Drug companies now offer discounts 'well below the level of the abatement' on many branded products, Dr Baker said.
'This leads in the most severe cases to practices providing medicines at a loss,' he added.
GPC Wales chairman Dr David Bailey said GPs dispensed some drugs at a loss of up to 10 per cent.
'A significant number of the drugs they now dispense are at a loss, even taking into account the dispensing fee.'
The GPC has agreed with NHS Employers to have a cost enquiry to inform negotiations over the fees, and the DoH will 'look at the whole issue of the clawback', Dr Bailey added.
Anastrozole, an aromatase inhibitor used to treat breast cancer, carries a drug tariff price of £68.56 but is reimbursed at £60.98, creating a loss to the practice of £7.58.
Dispensing practices operate at a commercial disadvantage to pharmacies, whose clawback is regularly renegotiated and now stands at 8.5 per cent. Unlike dispensing practices, pharmacies also benefit from so-called ZD (zero discount) products that attract no clawback.
Dispensing profits have already been hit by price reductions for generics, Dr Baker said, and could fall by £1,000 a month from October.
In 2006/7 GMS dispensers took home on average £124,045 before tax, 24.6 per cent more than non-dispensers. PMS dispensers took home £135,546, an average 17.2 per cent more than non-dispensing PMS GPs.