Community pharmacy leaders have united to call on the government to shield the sector from cost increases outlined in the Autumn Budget that they say will cost the sector £200m more a year.

In response, the government said it was 'committed to working with the pharmacy sector' and would 'set out further details on allocation of funding for next year in due course'.

Employment cost increases could cost pharmacy £200m more a year

Analysis from Community Pharmacy England (CPE) found that the increases to employers' National Insurance Contributions from April 2025 will cost the sector an estimated £50m, while increases in the National Living Wage could cost an additional £115-152m.

Without mitigation, these unplanned costs 'will push many pharmacies more towards insolvency’, leading to further closures and cuts to services, the sector has said.

In a letter to health secretary Wes Streeting, the National Pharmacy Association (NPA), the Independent Pharmacies Association (IPA), the Company Chemists’ Association (CCA) and CPE have urged the government to offset this cost for community pharmacies, as it has committed to do for other parts of the NHS.

Community pharmacies 'cannot pass on costs to patients'

The group highlighted that community pharmacies receive around 90% of their income from NHS dispensing and services.

Nick Kaye, NPA chair, noted that 'unlike most businesses', community pharmacies cannot pass increasing employment and operational costs onto their patients.

And he added that the sector was already facing 'cuts to their funding and record numbers of closures', giving contractors 'limited means to absorb [increased costs] themselves'.

'Pharmacies are ambitious to expand their role and want to work with the government to deliver the best possible services for their communities and take pressures from other parts of their health system,' he said.

'However, they simply cannot do this until these oppressive funding challenges are met.'

Increased costs 'could undermine' NHS transformation

And IPA chief executive Dr Leyla Hannbeck, said the sector was 'hurtling towards a disaster which may completely undermine any attempt to fix the NHS and shift care into communities'.

'The brutal reality is that local pharmacies have to pay their bills. Without the mitigating action we call for, these extra costs will be catastrophic for pharmacies,' she said.

'We need urgent actions before these measures undermine community pharmacies' ability to help with the NHS 10-year plan.

'I appeal to the health Secretary to meet with us so we can explore every option to prevent this,' she said.

CPE chief executive Janet Morrison also noted the government's goal of shifting healthcare from hospital to community.

'Ministers have a potentially disastrous situation on their hands. Urgent action is needed now to stem these costs and immediately re-set the contract sum to keep pharmacies afloat and to protect communities’ access to medicine supply and health advice,' she said.

'The community pharmacy network cannot be left to wither away'

And Malcolm Harrison, CCA chief executive, called the proposed cost increases 'short-sighted', with potentially 'far-reaching consequences for patients'.

'Pharmacies are already suffering from an annual funding shortfall of more than £100,000 per pharmacy. 3.4m hours of pharmacy access has been lost per year between September 2022 and June 2024 alone,' he said.

'The community pharmacy network cannot be left to wither away – we need action to mitigate the impact of these additional costs.'

Government 'committed to working with pharmacy'

In response to the sector's letter, the government said it was 'committed to working with the pharmacy sector' and would 'set out further details on allocation of funding for next year in due course'.

A Department of Health and Social Care spokesperson added: 'Community pharmacy been neglected for years, but it has a vital role to play in the shift of care from hospital to community as we reform the health service through our 10 Year Health Plan.'

And they highlighted the '£26 billion boost for the NHS and social care' outlined in the recent budget.