Since the COVID-19 pandemic, medicine prices in the UK have fluctuated like never before, with unprecedented increases over the past year. This situation, combined with wider economic pressures, has resulted in the closure of pharmacies across the UK and has placed enormous strain on those that remain open. This pressure arises because pharmacies must comply with current legislation and meet strict standards as healthcare providers.
Pharmacies rely heavily on NHS payments for the services they provide, the main one being the dispensing of medicines. Trying to keep businesses financially viable while ensuring continuity of care for local communities has become extremely challenging.
From the NHS perspective, the business aspect is often viewed separately from pharmacy services. The problem, however, is that pharmacies, as private businesses, cannot function without adequate financial support. They must purchase medicines and maintain sufficient stock levels to ensure continuity of service. This brings us to the biggest issue facing pharmacies both as private businesses and as NHS contractors.
When discussing medicine pricing in the UK, pharmacies, suppliers and manufacturers are treated differently. Pharmacies are reimbursed according to drug tariff prices, while suppliers and manufacturers are free to set their own selling prices, regardless of the reimbursement level pharmacies receive.
The prices charged by suppliers can fluctuate weekly or even daily. Although the drug tariff is updated monthly, the adjustments are often insufficient and fail to reflect real market fluctuations accurately.
Price concessions are negotiated only after problems emerge. They frequently arrive late in the month, not all requested concessions are approved, and, most importantly, concession prices still often fail to match the actual purchase cost of medicines. Community Pharmacy England reported record numbers of price concessions in 2026, warning that this reflected severe volatility within the pharmaceutical supply chain. However, perhaps England could learn from other countries that handle the situation differently.
There are countries in Europe — Romania, for example — where all participants in the pharmaceutical industry must follow the same pricing regulations. In Romania, none of these entities are allowed to sell medicines above the prices listed in the Canamed Catalogue, which functions similarly to the drug tariff. Medicine prices in the Canamed Catalogue are generally reviewed once a year, although additional reviews may take place when justified by market conditions and supported by evidence from manufacturers or suppliers.
This differs significantly from the UK system, where, during the COVID-19 pandemic, the price of paracetamol reportedly increased overnight from 41p per pack to £5 simply because suppliers took advantage of the sudden increase in demand.
With regard to reimbursement, pharmacies in Romania issue invoices that are then checked by the authorities against the electronic records submitted by pharmacies. This creates transparency and allows pharmacies to know exactly what to expect regarding reimbursement payments.
However, it is extremely difficult to predict payments accurately in the UK, and pharmacies are expected to accept NHS payment statements that can fluctuate by thousands of pounds from one month to another, even in pharmacies with stable dispensing volumes.
When discussing clawback mechanisms, in Romania this ‘tax’ is paid only by manufacturers. In the UK, pharmacies, suppliers and manufacturers are all affected in one form or another, meaning that all sides effectively contribute to the same financial burden. Again, this has a major impact on the sector, particularly on pharmacies, as these costs are ultimately reflected in increased supplier prices and reduced pharmacy profitability. Our own net operating profit margins declined from 2–6% in the first three months of 2025 to just 1–4% during the same period in 2026.
In Romania, the clawback is mainly a tax paid by pharmaceutical manufacturers to the public health system when medicine spending exceeds the state budget. Drug companies pay a quarterly contribution that applies to reimbursed medicines funded by the national health system. There are different rates for locally produced medicines, generics and biosimilars, and innovative medicines. The purpose of this tax is to keep medicine spending under control and to shift part of the financial risk of overspending onto pharmaceutical companies.
In the UK, clawback relates to two separate aspects. The first concerns the community pharmacy sector. The NHS assumes that pharmacies make profits through discounts received from wholesalers and therefore deducts a certain estimated percentage when reimbursing pharmacies — this is commonly referred to as ‘clawback’. In this way, clawback affects pharmacies directly, but not manufacturers.
The second aspect relates to the branded medicines rebate scheme, under which manufacturers repay part of their sales revenue if NHS spending on branded medicines rises above an agreed cap.
Therefore, when someone in the UK pharmacy sector refers to “clawback,” they are often referring to the NHS discount deduction applied to pharmacies. In Romania, however, the “clawback tax” almost always refers to the pharmaceutical industry levy paid by manufacturers.
I am not suggesting that other systems are perfect or necessarily better than the UK system; however, perhaps if the relevant institutions examined some of the more effective aspects of these systems, meaningful improvements could be made to our own.
Mihai Tudor Ionescu, superintendent pharmacist, Avonmouth Pharmacy, Bristol
