Drug tariff reduction could ‘hamper’ Pharmacy First, CPE warns

The reduction in Category M reimbursement outlined in the January drug tariff could ‘hamper’ the successful launch of Pharmacy First in England, the sector’s negotiator has warned.

Though the margin adjustment was expected to be greater than the eventual 9% outcome, Community Pharmacy England (CPE) has argued that, given the ongoing pressures on the sector and the imminent launch of Pharmacy First this month, reductions should not have been applied at all.

Together with reduced medicines market costs and several lines being switched from branded to generic formulations, CPE has estimated that between January and March this year, the sector will receive £38m less in reimbursement than between October and December last year.

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Based on estimated dispensing volume, CPE suggested that community pharmacies would receive an average of 14p less per item over the next quarter (January – March 2024) than they did in the final quarter of last year.

Mike Dent, director of pharmacy funding at CPE, called the current reimbursement system ‘fundamentally flawed’, adding that it ‘has failed to keep pace with the massive growth in prescription volumes that we have seen over the last decade and more’.

The average community pharmacy contractor dispensed 94,500 items during 2022/23 – an increase of 4.42% from 90,500 in 2021/22 and a 13.5% increase from the average of 83,300 in 2015/16.

Mr Dent commented that pharmacy funding had not grown in line with the increased workload associated with dispensing more items.

‘Margins have been spread thinner and thinner as the envelope has not grown in alignment with the amount of work being done by pharmacies,’ he said.

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‘It is now impossible to ensure the continuity of safe dispensing while remaining within NHS reimbursement targets and we will keep warning government of the consequences of this.’

He warned that ‘continual squeezing of pharmacy reimbursement’ would lead to more pharmacy closures, with many affecting patients in areas of deprivation and social hardship.

And he said that the timing of the January reductions made ‘no sense’ while pharmacy owners were preparing to launch Pharmacy First at the end of the month.

‘The reductions to the January Drug Tariff come at an awful time and we continue to warn government and NHS that prolonging the current financial squeeze on pharmacies will be catastrophic for yet more businesses and their patients,’ he said.

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In a statement released last month, the negotiator said that in discussions with the Department of Health and Social Care (DHSC) CPE had lobbied for no reduction in the January Drug Tariff.

‘As well as stressing the unsustainable financial pressures already being experienced by English pharmacy businesses, making further reductions impossible to absorb, we argued that the timing of this reduction, coinciding as it does with the launch of the new Pharmacy First Service, could hamper the successful launch and uptake of this critical service,’ the negotiator said.