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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.

"If the Government does not support community pharmacies with the relevant funding, then we will see a massive number of closures," warns Dr. Leyla Hannbeck, chief executive of the Independent Pharmacies Association (IPA). The Fight4Pharmacies campaign, led by the IPA, is urging prime minister Rishi Sunak to address a critical £1.2 billion funding shortfall that threatens the survival of independent pharmacies across the UK. This urgent plea comes as 1,000 community pharmacies have closed since 2019 due to rising operational costs and insufficient reimbursements. On May 21, supporters of the Fight4Pharmacies campaign, along with 50 MPs including prominent figures like Priti Patel and Gavin Williamson, delivered a petition to Downing Street. The petition, Prescription to Save Our Pharmacies outlines how independent community pharmacies can be supported to ensure smooth running of pharmacies.

The National Pharmacy Association (NPA) has called for immediate intervention by Health Secretary Neil Gray to compensate pharmacies left in financial chaos due to flaws in Scotland's new pharmacy payment system. Introduced last year, the system was designed to streamline payments to pharmacies, dispensing doctors, and medical appliance suppliers. However, the NPA, which represents independent pharmacies across the UK, reported that many pharmacies were facing repeated shortfalls in expected funding under the system. Some pharmacies have encountered discrepancies of tens of thousands pounds due to errors in the Data Capture Validation & Pricing process introduced by NHS National Services Scotland. In other cases, NHS Boards have clawed back money from pharmacies at short notice, following processing errors that had initially resulted in an overpayment.

"Discussions must involve the government on behalf of NHS Scotland, CPS on behalf of the owners, and the PDA as the pharmacists' representative," it said. The association believes that there is a need for discussion and decision-making that listens to and balances the rights and responsibilities of both employers and workers, to generate benefits for individuals, organisations, and society. It added: "Even though Scotland provides the most generous community pharmacy settlement in the UK, recent reports suggest it is not enough for pharmacy owners with CPS's rejection of the latest funding proposal in May. Though the Scottish government found an extra £20M to ease pressures related to medicines price increases, an overall agreement has still not been reached." "The UK-wide chains may be doing less well in the parts of their networks covered by the Westminster government's contract, but the taxpayers and government of Scotland need to be given reassurance that they are in no way subsidising funding shortfalls in England's pharmacy contract." Recently, when LloydsPharmacy's Scotland branches recently came on the market, they appear to have been sold exclusively to existing contractors, including the UK-wide multiple, Rowlands Pharmacy, who have acquired 30 of them. Other small and medium-sized Scottish pharmacy chains have apparently been able to double in size overnight by acquiring branches.

The National Pharmacy Association (NPA) has raised the alarm that many community pharmacies are facing losses on NHS prescriptions due to the "broken" funding system. An analysis of prescription drug prices by the NPA revealed that pharmacies are being underpaid by the NHS by up to £75 a pack for common medicines, resulting in losses of thousands of pounds each month. The analysis report released today (16 October) shows the government reimburses £18.06 for a 56-tablet pack of Amantadine, a drug used to treat Parkinson's symptoms. However, the market price of the drug is £94.05 per pack, leading to a loss of £75.99 per 56-tablet pack for pharmacies-amounting to a shortfall of over £1 per tablet. In some instances, NHS funding covers only one-fifth of the cost that pharmacies have to pay for medicines, according to new figures from the NPA.

The current funding and contractual framework for community pharmacy is not fit for purpose, the Health and Social Care Committee report has concluded, recommending a complete overhaul to reduce its complexity. Published today, the report highlighted the necessity for a new framework to ensure adequate funding and to prevent damaging cross-subsidy between clinical services and prescription dispensing, as is presently observed. The report revealed that community pharmacy funding has fallen by over 30 per cent in real terms since 2015, resulting in an annual shortfall of at least £67,000 per pharmacy for individual owners. More than 1,100 community pharmacies have closed since 2015, of which were serving the most deprived areas, it said. MPs on the committee have urged the government to address medicine shortages, warning that they could undermine flagship initiatives such as 'Pharmacy First' by eroding public confidence in pharmacists. "People living with type 2 diabetes, ADHD, epilepsy and cystic fibrosis, and those experiencing the menopause, have faced challenges accessing the vital medication they need. Many others are facing similar experiences.