Pharmacies face £1,100 monthly reimbursement cuts as government implements £34 million adjustment to Category M prices
The government have imposed a £34 million per quarter adjustment to the prices of Category M* products in the English Drug Tariff from January 2025. They say that this is to compensate for retained margin adjustment following the latest margin survey, changes in the current market prices of medicines, and the addition of new lines into this category.
Apparently, this is partly down to calculation errors made in the summer of 2024. Indications are that the reductions (‘clawback’) will be extended into the April-June quarter.
This represents an average monthly reduction in reimbursement of around £1,100 per pharmacy creating further cash-flow challenges at a time when pharmacies are already under extreme financial pressure with most operating at a loss.
The background to this is that of the £2.592 billion contract fund, £800 million should come from retained margin on purchase for Category M medicines. This figure has been static since 2014 despite the value of prescriptions dispensed increasing by 10% and the number of items dispensed up 8.5% over that 10 year period.
There is little or no transparency on how much retained margin an individual pharmacy contractor actually receives and unlikely to be fairly distributed given the variance in buying power between independents and larger groups. As this represents 30% of income, reimbursement needs a complete overhaul to ensure transparency and equity, and deal with the increasing level of dispensing at a loss.
One option would be to remove the retained margin element altogether and just fund more appropriate professional service fees. However, the NHS and treasury are unlikely to accept that as pharmacy provides them with a free and competitive procurement service which saves them a fortune on the annual drugs bill but costs pharmacy in time, effort and money Read More…