The Department of Health and Social Care (DH) this week (March 31) revealed that the new £3.073 billion pharmacy core contract for 2025/26 will see the sector retain an additional £100m from dispensing drugs.
In a letter to contractors, the DH and Community Pharmacy England (CPE) said that some £900m of the core funding – up from £800m in 2023/24 – will be set aside for the allowed medicines margin, reflecting “the increased activity and costs associated with the supply of medicines”.
Read more: BREAKING: New 2025 CPCF funding deal - uplift revealed
The deal also includes a “one-off write-off of £193m of medicines margin” for historic over delivery, with both reflected in the drug tariff from this month, they added.
This still leaves £42m of margin over delivery “to be recouped over the next 12 months”, CPE said.
Plans in progress
The letter to contractors revealed that while the cash is “being recouped, concessionary prices will be constrained so as not to undermine the recouping”.
It said that if over-delivery continues, the DH and CPE will consider “further strategies to stabilise Category M” – including “moving margin between categories or increasing the branded discount deduction percentages”.
Read more: Funding breakdown: Write-offs, service payments and activity fees
And it added that other margin plans “will also be progressed” – including “improving and validating the medicines margin survey to underpin work on medicines margin distribution”.
“A process for early entry to Category M of high-volume generics that come off-patent” is in the works, as well as a change to “Category C reimbursement price setting arrangements, where there are multiple source products”, the letter said.
Read more: ‘CPE is falling into a trap’ - pharmacy reacts to funding deal
The DH and CPE also said that they would “explore whether speeding up the Category M reimbursement price setting arrangements would be better…than the current timetable”.
And the bodies will work to “gain a better understanding of the impact of local prescribing activities, such as the use of branded generics, on community pharmacy medicines margin”, and “consider any actions [they] could take as a result”.
Payment “redesign”
CPE said that the DH has committed to working with the negotiator “to manage and review” the margin system.
And it revealed that the government will consider “supporting earlier payment for dispensing on the 1st instead of 12th of the month”.
CPE added that the DH has a “wider ambition to redesign the whole payment timetable to reduce complexity”.
Read more: Pharmacies to offer free morning-after pill from October
Meanwhile, the new contract also saw fee uplifts for most pharmacy services and a 19p increase in the single activity free (SAF).
But the payment given for hypertension clinic check consultations has been slashed by a third, from £15 to £10.
Check the C+D site for the latest coverage on this developing story
