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The tripartite negotiations to set the arrangements for the Community Pharmacy Contractual Framework (CPCF) in 2022/23 - Year 4 of the five-year CPCF deal - have now begun, the Pharmaceutical Services Negotiating Committee (PSNC) said. The discussions, beginning ahead of the start of the financial year, are taking place between the PSNC and the Department of Health and Social Care (DHSC) and the NHS England and NHS Improvement (NHSE&I). It will cover issues related to service, funding and other arrangements for pharmacies in 2022/23, in line with the five-year CPCF deal. The three entities will also discuss the progress made to date, which has been partly impacted by the Covid-19 pandemic, and the recent joint Annual Review process, where PSNC raised serious concerns around the available capacity within community pharmacy.

Pharmaceutical Services Negotiating Committee expects the next round of negotiations to set the arrangements for the Community Pharmacy Contractual Framework (CPCF) in 2022/23 - Year 4 of the five-year CPCF deal, to begin soon. The negotiator held a meeting on November 24 and 25 to discuss the burning issues affecting the sector and to plan for upcoming negotiations with the Department of Health and Social Care (DHSC) and NHS England and NHS Improvement (NHSE&I). It aims to complete these negotiations by April, allowing ample time for contractors to make arrangement prior to the beginning of the financial year. PSNC vice-chair, and independent contractor, Bharat Patel said the entire sector is worried about the "outlook for pharmacies as we head into a difficult winter," and is working to find solutions. He noted that PSNC "will be bringing proposals for additional funding and support, particularly around the treatment of 'walk-in' patients, to the table, along with a heavy dose of realism for government and the NHS about the current challenges in the sector." While expecting a difficult round of discussion with the government, Patel remained optimistic about a favourable outcome for pharmacies.

A harsh funding regime that hasn't adapted to changing macroeconomic realities means the viability of large parts of the pharmacy sector is at risk unless the model changes. Very simply, across the sector, revenue has remained largely fixed while costs have increased significantly, making it impossible for many pharmacies to sustain their business models. The sector has seen the closure of more than 1,500 community pharmacies since 2015, with 700 of these closures occurring since 2021. Larger pharmacy operators such as Lloyds, Boots, and Rowlands have seen the biggest decline in numbers, with smaller businesses operating between one and five pharmacies now accounting for almost 50% of the sector. Despite rising inflation and business costs, the NHS pharmacy funding model has remained fixed. Over the period of the current Community Pharmacy Contractual Framework (CPCF) - 2019-2024 - pharmacies have experienced a 30% real terms cut in core funding leading to an annual shortfall of over £750 million, equivalent to £67,000 per pharmacy in England. The current CPCF is due to end in 2024, and there is still no arrangement in place for future funding, leading to delayed and inefficient spending decisions and hampering the ability of the sector to plan and attract much-needed investment.

The 2025/26 pharmacy contract consultation will include a review of the medicine margin and reimbursement arrangements, health and care minister Stephen Kinnock has confirmed. Kinnock made this statement in response to a written question from Nick Timothy, Conservative MP for West Suffolk, who asked the secretary of state for health and social care, if he will review the reimbursement system for pharmacies and GP practices dispensing medicines. Kinnock stated that consultation with Community Pharmacy England (CPE) for the 2025/26 Community Pharmacy Contractual Framework (CPCF) has started and will include "reviewing the allowance for medicine margin as part of funding, and any further changes to the reimbursement arrangements." However, he clarified that there are currently no plans to review the reimbursement system for general practices (GPs) dispensing medicines. Kinnock said: "Dispensing practices receive a dispensing fee, approximately £2.00 to £2.30 per item, which is intended to cover dispensing costs. "This fee is calculated based on forecasted volumes of prescriptions to be dispensed and the size of the funding envelope, according to a methodology agreed by the Department, the General Practitioners Committee (GPC), NHS Employers, and the Welsh Government."

In response to a recent Parliamentary question regarding pharmacy reimbursement, pharmacy minister Stephen Kinnock stated that pharmacies were permitted to retain £850 million from the medicine margin for 2023/24. The medicine margin represents the difference between the product price reimbursed by the National Health Service (NHS) and the price at which pharmacies buy them. Rebecca Smith, the Conservative MP for South West Devon, inquired about the number and proportion of community pharmacies that had dispensed medications at a loss over the past three years. Kinnock replied that they do not hold this information, and explained that community pharmacy reimbursement arrangements "do not aim to ensure that every pharmacy is paid as much or more than it paid for every product, but aims overall to reimburse as much as they were bought for, plus the allowed medicine margin." Additionally, the minister highlighted that as part of the Community Pharmacy Contractual Framework (CPCF) for 2023/24, pharmacies are allowed to retain "£850 million from the medicine margin, on top of what they are paid for the medicines they purchase as part of providing NHS services."

The government has responded to the Health and Social Care Select Committee's report on community pharmacy, acknowledging 17 of the 19 recommendations. In its report published on 29 May 2024, the Committee recommended, among other things, an overhaul of the Community Pharmacy Contractual Framework (CPCF), closing the funding gap, tackling medicines shortages by introducing generic substitution, and establishing an integrated and fully funded workforce plan for pharmacy. In its response, released today, the government stated that NHS England is currently conducting an economic analysis of the sector, which will inform future proposals for funding and contractual arrangements. On medicine shortages, it mentioned that the Department of Health and Social Care, working closely with NHS England, is taking forward a range of actions to improve their ability to mitigate and manage shortages and strengthen resilience. Additionally, the government has stated that it will "publish a refreshed Long Term Workforce Plan" this summer and is "committed to growing the pharmacy workforce."

The new board of the National Pharmacy Association (NPA) has adopted 10 principles for transforming the contractual framework in England. The board met for the first time in April, believes that the current Community Pharmacy Contractual Framework is failing NPA members, the wider sector, the NHS, Government and patients. The association's new vice chair, Jay Badenhorst, said: "We can't wait until the current framework limps to its finish line in 2024 before giving serious thought to the new race we must all run in the future." "Before negotiations for a new contract begin in earnest, we want to make our position clear to all of those who will be involved in its development. Years more of the same would be totally unacceptable. Tinkering at the edges of the current arrangements as the basis for a new deal could not achieve the transformation that is needed." Former chair of the NPA, Andrew Lane, listed some of the principles in a speech to industry leaders in January, but this is the first time the approach has been agreed in its entirety, following months of testing with NPA members.