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Category M price rise of £15m per month to ‘bring some relief’ after margin delivery shortfall

By Costanza Pearce

15 Jul 2019

A rise in category M reimbursement prices of £15m a month is set to ‘bring some relief’ to contractors after a predicted shortfall in the margin delivery rate for this year, the Pharmaceutical Services Negotiating Committee (PSNC) has announced.

The change, which comes just four months after the end of the clawback imposed in November 2018, will be effective from August 2019, PSNC said today (15 July).

The new prices are set to ensure contractors receive the agreed annual margin of £800m this financial year after reimbursement levels since April have been ‘lower than anticipated’, the negotiator said.

PSNC chief Simon Dukes said: ‘The past few months have been incredibly difficult for many community pharmacy contractors, and this has in part been caused by the need to keep category M reimbursement prices low following excess margins earned in previous financial years.

‘These August price increases are being made to try to correct margin delivery for this financial year and this should bring some relief for contractors.’

The single activity fee (SAF) will also rise by 1p to £1.27 per item from August to ensure contractors receive the correct levels of funding this year, PSNC added.


‘Cashflow difficulties’


Many contractors are facing a ‘difficult financial position’ due to the margin recovery process and it is hoped the move will ease immediate cashflow issues, the negotiator said.

Mr Dukes said: ‘PSNC is very concerned about the impact that cashflow difficulties are having on pharmacies and we have made this very clear to the Department of Health and Social Care (DHSC). We are pressing for improvements to the funding and margin distribution systems to try to avoid this sort of scenario in the future.

‘However, within the current funding structures and with wider negotiations on funding ongoing, the committee felt that an immediate increase in category M reimbursement prices was the best course of action to ensure that contractors receive all the funding to which they are entitled this year.’

The category M prices will be reviewed in the autumn, when the new community pharmacy contract is expected to be ready for implementation, a spokesperson for the negotiator added.

PSNC began its 2019/20 contract negotiations with the DHSC and NHS England in April and said it anticipated ‘challenging conversations’ around funding and reimbursement.

Meanwhile, the National Pharmacy Association (NPA) called for the upcoming contract to ‘be fair to independent pharmacies’ by exploring funding models that rely less on margin in June.

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