Does the big increase in drug price concessions indicate medicines shortages?

Frustrations around drug price concessions are reaching boiling point. In February 2026, 174 concessions were granted, in what Community Pharmacy England (CPE) branded a “very worrying” start to the year. The last time concessions exceeded that number was in March 2023. 

That same month, CPE also reported receiving its highest number of reports of medicines not matching Drug Tariff prices since implementing its automated system in 2019.

“This is a concerning escalation and reflects the ongoing lack of resilience and challenges in the medicines supply chain,” said James Davies, director of research and insights at CPE, at the time of the February announcement.

Then in March 2026, the number of drug price concessions hit 197, some of which involved an 8-fold rise in price.

Price concessions are granted for generic medicines when pharmacists are unable to source them at the price listed in the Drug Tariff. If a price concession is in place, the pharmacy contractors will be reimbursed at the concessionary price rather than the Drug Tariff’s listed price. They can be an indication of shortages in the market.

Middle East upheaval

It’s nearly two months since the conflict in Iran began. CPE is wary of how the military action — which has effectively closed off the busy Strait of Hormuz shipping route — is affecting drug availability and prices. 

“We continue to watch events in the Middle East closely, as the impact on air and shipping routes will likely affect the availability of some medicines in the coming months,” says Davies. “DHSC [Department of Health and Social Care] needs to accelerate its plans to give pharmacists more flexibility to supply other available alternatives.”

Meanwhile, the Independent Pharmacy Association (IPA) is already hearing reports of shortages from its 5,000 members. Although the Iran conflict will not have accounted for February 2026’s spike in drug price concessions, it could lead to even more pricing issues for the foreseeable future, warns Leyla Hannbeck, chief executive of the IPA. 

“Community pharmacies are already feeling the strain of fragile global supply chains,” she wrote in a letter to health secretary Wes Streeting sent on 4 March 2026. “Tensions around the Strait of Hormuz have raised fears of rising crude oil prices and disruptions to international trade. This matters for medicine.”

Ashley Cohen, contractor and board member of the National Pharmacy Association (NPA), has already noticed a rise in difficulties. He has recorded “well over” 200 lines that have been impossible to buy at drug tariff prices in March 2026. 

The effect is particularly detrimental when frequently used drugs, such as aspirin, are among the lines in the March 2026 concessions, adds Cohen. 

Hannbeck says pharmacists also have reported supply issues with co-codamol and opioids since the outbreak of the war. Six co-codamol lines were among the drugs listed in the March 2026 concessions, with up to a 56% rise in reimbursement prices. 

Other drug prices appear to have spiked without yet being included in the agreed concessions. For example, propantheline 15mg has shot up from £20.74 to £97.52, Hannbeck reports.

‘No shortages’

On the flip side, medicines suppliers and the government insist that there are no issues with supply. Medicines UK, which represents generic manufacturers and suppliers of 85% of the prescription medicines used by the NHS, says it is “difficult to be definitive about why concessionary prices were so high in February [2026]”.

The trade body maintains shortages are not currently a problem, even in the wake of the Iran conflict. “Our monthly shortages tracker for March [2026] shows that medicine supply issues are currently at their lowest level for more than three years,” says Mark Samuels, chief executive of Medicines UK.

“This suggests there is ample stock in the system.”

On the branded side, a spokesperson from the Association of the British Pharmaceutical Industry (ABPI) also reports no noticeable fallout from the Iran war in its monitoring. “The region is not a significant exporter of medicines, and supply routes are flexible and can adapt to disruptions,” says a spokesperson for the ABPI.

That same message is reiterated by the DHSC, which says the government is scanning for threats and working to build long-term resilience in medicines supply. “There are currently no reported medicine shortages as a result of conflict in the Middle East,” it says.

However, to confuse the picture even further, Jim Massey, chief executive of NHS England, told a radio phone-in show that he was “really worried” about medicines supply, telling the show that “we’ve already had a couple of supply shocks in the last 12 to 18 months of key supplies”. 

‘Broken’ drug reimbursement system

Still, pharmacy bodies believe the problems go deeper than the Middle East conflict. For them, it’s simply an escalation of a deep-rooted problem in the drugs reimbursement system, which means medicines are too often unavailable at the Drug Tariff price. Contractors will regularly make a loss upfront and are then reimbursed at a higher rate once concessions are agreed.

That has an inevitable impact on cashflow — especially when concessions reach the high levels seen in recent months. “Contractors are having massive issues and are out of pocket to the point that many are struggling to keep their doors open,” Hannbeck tells The Pharmaceutical Journal.

Cohen has experienced the problems first-hand. “It causes me financial anxiety because I don’t know what I’m being paid until the end of the month, or the beginning of the next month,” he says.

“I don’t know if I’m dispensing at a loss or breaking even, I am not able to plan my business.” 

“I could accept being out of control if it was a dozen prices, but when you’ve got 200 [concessions], I can’t reconcile that amount,” adds Cohen. He also believes the sheer number of concessions at play shows that “the reimbursement model is broken”. 

In his role as NPA board member, Cohen is keen to highlight the toll on independent businesses. “Independent pharmacies tend to be worst off from this crazy system, which is unfair and far too complicated,” he argues. “Most independent pharmacies cannot buy bulk stock in advance, so they are particularly vulnerable to price instabilities.”

“Many pharmacies make huge losses supplying many NHS medicines, which makes no sense whatsoever,” Cohen notes.

The ongoing nature of these challenges — irrespective of geopolitical events — have fuelled ever more urgent calls for a revamp of the concessions system. The IPA has been “banging the drum” for advance payments to ease cashflow since last year, says Hannbeck. 

That sentiment is shared by the larger players represented by the Company Chemists’ Association (CCA). “Whilst price concessions are an important part of the supply model in England, they only treat the symptom of supply disruption and not the causes,” says Malcolm Harrison, chief executive of the CCA. 

He adds: “A more agile reimbursement system and government investment in medicines pricing and in supply resilience would help to reduce the number of shortages in the UK market, ensuring better supply for patients.”  

CPE is also keen to highlight the fallout. “These issues are placing intense strain on community pharmacies, with our most recent data showing that one in four teams are spending more than two hours a day sourcing alternatives,” says Davies. “We cannot let this persistent disruption — which is exacerbating the intense financial challenges pharmacies are under — become business as usual.”

Thin margins and reporting lag

Samuels says that the rise in price concessions is, ultimately, a sign of a system in which margins are being spread too thinly. That inevitably results in pharmacies being unable to buy drugs at the prices in the Drug Tariff, which means concessions are the only mechanism of clawing back losses.

 “We are increasingly concerned that too much of the pharmacy margin is being absorbed by concessionary-priced products,” he explains.

“This is diverting margin away from other medicines and worsening the overall problem. There is only a finite amount of margin available, and it is being spread too thinly.”

The government began gathering pricing data from generics manufacturers every three months in 2018, in a bid to make concessions more responsive. However, Samuels believes that should be updated to a monthly reporting system, to stop pricing data lagging behind the reality.

“One option could be more regular reporting from manufacturers, which could help ensure reimbursement prices are updated in a more timely way,” Samuels suggests.

Another solution would be to increase the amount of funding available to community pharmacy to make margins less tight, he adds.

CPE could not comment on specific proposals for a revamp of the system owing to ongoing negotiations, but a spokesperson says it “continues to work with the DHSC to reform reimbursement”.

So even if the state of medicines supply is hotly debated, the need for systemic change in reimbursement is one thing everyone can agree on.