A supply chain finance (SCF) scheme involving payments between health chiefs and pharmacies failed to deliver on promised savings of £100m.
In a report the Public Accounts Committee (PAC) said the Pharmacy Early Payment Scheme (PEPS), financially backed by Greensill Capital for three years, was designed to speed up payments by the Department for Health and Social Care (DHSC) to pharmacies to cover dispensed prescriptions.
The report said a 2012 business case for PEPS included a target of £100m savings, based on advice from Greensill founder Lex Greensill, but “this figure cannot be validated and estimated savings as of today cannot be measured reliably”.
“There is no evidence that the predicted benefits and savings from introducing supply chain finance into pharmacy reimbursement processes were realised,” it said.
The PAC said Taulia, whose key subcontractor and financial guarantor was Greensill Capital, was appointed as the sole supplier on the Supplier Early Payment Solution framework in 2018. Lex Greensill was senior advisor to government on SCF between 2011 and 2017.
“Crown Commercial Service failed to sufficiently manage and consider conflicts of interest for the appointment of contractors,” said the report.
The report said over three years Taulia processed SCF loans to pharmacies totalling £3.32bn and received income of around £840,000.
In March 2021 Greensill Capital went into administration and from November 2021 DHSC introduced a new payment schedule which allows pharmacies to be paid without SCF in four business days.
The report said: “HM Treasury was unconvinced back in 2012 that there was market failure or that government needed to be involved in supply chain finance for reimbursing pharmacies.
“The inability of the department [DHSC] to reliably measure any potential savings and the fact that these reimbursements can now be made within four business days of claims being submitted, validates HM Treasury’s scepticism back in 2012.”
Under SCF a bank or financial institution pays a supplier’s invoice early for a fee and collects the full invoice amount from the buying organisation on the due date.
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