The UK is facing a cost-of-living crisis, with the highest rates of inflation since the early 1980s. Pharmacies are suffering the biggest hit to their incomes since records began, alongside soaring energy bills, and rising locum prices all while contractors prepare for a surge in medicine costs.

Three months on from first speaking to them in April, The Pharmacist revisit the same three pharmacies – a small rural pharmacy, a small city chain and a medium-sized chain – to find out how they are coping now with the deepening crisis.

The small rural pharmacy: ‘I had to pay a locum £3.45k to cover for me while I had Covid’

Mike Hewitson, a rural pharmacy owner, and superintendent says he is having to fork out ‘eye-watering figures’ to keep his staff on.

When we spoke to Mr Hewitson in April, he told The Pharmacist that his largest expenditure across his two pharmacies in Somerset were staffing costs, which he raised to take account of the national living wage increase - which rose to £9.50 per hour earlier this year.

Three months on and his staffing costs are continuing to rise. ‘I want to look after my teams and I do understand that costs are continuing to increase and people are suffering,’ he says.

According to recent data from the British Retail Consortium, the price of groceries grew by 3.1% in June, accelerating from May’s increase to hit the highest rate of shop price inflation since September 2008.

‘But at the same time, we are not a bottomless pit of money. If I give staff a pay rise, I will have to cut back on their hours so I can’t win either way,’ he continues.

The contractor says he is still having to pay ‘extortionate’ prices for locum cover.

Earlier this month, Mr Hewitson contracted Covid had to pay a locum pharmacist £3.5k to cover him as he self-isolated for two-weeks.

And as Covid cases begin to rise again – with the Office for National Statistics estimating that one in 30 people in England are currently carrying the virus – Mr Hewitson expects to be paying more locum fees going forward as more staff test positive.

‘Some pharmacies are choosing to close their doors while staff are off sick with Covid, expecting us to pick up the slack,’ he says.

‘We’re paying a premium to make sure that we can stay open by paying for locums,’ he explains.

However, Mr Hewitson is mostly concerned about medicine costs, which he predicts will rise ‘remarkably’ over the next six months.

‘We haven't seen huge rises in acquisition costs of medicines yet but it's a lagging indicator because the industry works ahead of itself,’ he explains.

Martin Sawyer, executive director of the Healthcare Distribution Association, which represents businesses that supply medicines to the UK chain, has told MPs [in month] that up to 90% of UK medicines are imported from abroad.

‘All these items are bound to have higher shipping costs and costs to distribute across the UK because of rising energy and petrol costs,’ Mr Hewitson says.

‘This is going to have a direct result on us, pharmacists,’ he adds.

The last time The Pharmacist spoke to Mr Hewitson, he was considering dropping his free delivery service because of the rising cost of fuel. Although he has still not yet stopped the service, he says it is still a ‘strong possibility’.

One of the main reasons some pharmacies, including this own, have not yet dropped delivery services is the fear that patients would move to distance selling pharmacy providers, Mr Hewitson says.

‘In this case, we’d lose volume of patients, and it could very quickly become a downwards spiral of income loss,’ he explains.

The small city chain: ‘There’s less in our pockets each month’

Ashley Cohen, managing director at Pharm-Assist (Healthcare), a small chain of independent pharmacies, says his private services are helping him survive the financial crisis many pharmacies are facing.

However, Mr Cohen says his business, which comprises three stores in Leeds, is still facing ‘unsustainable pressures’.

‘Prices for everything are continuing upwards for my pharmacies,’ Mr Cohen says.

‘This includes fuel, medicine prices and staffing costs. At the same time, pharmacy services commissioned by the NHS are not bringing in the additional revenue we do need to make up for it,’ he explains.

‘Most contractors would agree there is less cash in our pockets each month,’ he adds.

Mr Cohen did say that his Covid vaccine clinic is helping him to pay the additional staffing costs, which he raised to keep up with inflationary pressures.

However, last week it emerged that pharmacies providing Covid jabs will be paid 20% less per vaccination in the autumn booster programme than in previous campaigns – with an item of service fee of £10.06, down from the current rate of £12.58.

PSNC services director Alastair Buxton says the new fee reflected how NHSE&I did not recognise the ‘increasing costs that contractors are experiencing in providing services when setting the fee for the service’.

Other services commissioned by NHS England and Improvement have not been so fruitful for Mr Cohen.

‘The GP community pharmacy consultation service [GPCPCS] and the discharge medicine service and even all the other wonderful clinical services things that come out of the NHSE&I are potentially a fantastic way to bring in additional revenue. However, their scale of the services does not bring significant cash through,’ he explains.

He is currently seeing between two to three GPCS referrals walking through his doors each day, but says that ‘upwards of 10’ are needed ‘to see a real difference’.

Unlike Mr Hewitson, Mr Cohen has begun to cut back on his delivery service considering recent financial pressures.

‘We are trying to make sure that the only people who use the delivery service are vulnerable. If not, we are asking patients whether they have a neighbour or family member nearby who can collect their prescription.

‘We may introduce a charge, but then the cost of collecting those is probably more expensive than what we’d be making from it,’ he explains.

Mr Cohen says he is relying increasingly on services outside of the NHS contract to keep his business afloat.

‘In April 2021 around 93% of the services we provided in my pharmacies were commissioned by the NHS, which has now dropped down to around 60%,’ he explains.

Now he has prison, care home, and hospice contracts. ‘You have to be innovative and entrepreneurial with your pharmacy these days,’ he says.

Mr Cohen, much like other contractors, is waiting patiently for the new pharmacy contract to be published.

‘I would be gobsmacked if post-Covid and during an 11% inflation if we do not get any sort of uplift, and honestly if we do not now, I do not think we ever will.’

In March, the PSNC chief executive Janet Morrison told The Pharmacist that the community pharmacy sector is likely to regress in several ways if more funding is not granted as part of the community pharmacy contractual framework.

It comes after the negotiating body has already said the sector will not likely see any additional funding as part of the CPCF for the remaining years of the deal.

The medium-sized chain: Things at the pharmacies are ‘just as hard’

Mimi Lau, managing director of Mr Pickford's, discusses how her larger pharmacy group has successfully cut down on free deliveries in light of the cost-of-living crisis.

She manages 21 pharmacies across Leicester, Hampshire and Doncaster, 15 of which she opened during the pandemic.

Ms Lau tells The Pharmacist that the financial situation at her pharmacies is ‘just as hard’ as when we last spoke in April, without ‘any signs’ of getting any easier ‘anytime soon’.

‘We have been working hard to retain the staff we have by making sure they are being paid enough,’ she says.

‘We are trying to pay our staff more than the inflation rate as pharmacy, we believe, is a very skilled job and needs to be reflected in pay.’

In paying their staff much higher wages Ms Lau is being forced to scale back on other parts of the business, including free deliveries as fuel prices reach an all-time high.

‘We’re aiming to get our delivery numbers back down to a pre-Covid level, so they are more affordable,’ she explains.

To do this, Ms Lau’s pharmacy staff are being encouraged to have ‘dialogues’ with each patient using the delivery service.

‘We want as many of our patients – for who it is possible – to collect their prescriptions from the pharmacy so we can check up on them,’ she says.

While the patients visit the pharmacy to collect their prescription, the pharmacists can offer various clinical services to make some additional income, such as blood pressure monitoring and a new medicine service (NMS).

This, she hopes, will bring the number of deliveries ‘back down’ to a ‘manageable amount’ – with an aim of around pre-Covid levels - while bringing in some additional revenue.

Much like Mr Cohen, her pharmacies are relying heavily on the Covid vaccine service.

‘It’s such as shame that pharmacies are being offered less money to operate and provide these vaccines this autumn,’ she says.

‘To give Covid vaccines pharmacy staff require an additional set of skills than providing other vaccines, which should be reflected in the price,’ she adds.

‘Many pharmacies are still heavily banking on the cash flow from this service to staff afloat while we have no uplift from the contract, this is going to make life that little bit harder for them,’ she also explains.