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Nearly eight in ten pharmacies are not financially sustainable in the short term, according to results of an economic analysis of the pharmacy sector in England conducted by Frontier Economics and IQVIA.
The NHS England-commissioned analysis, published on 28 March 2025, looked at “the full economic costs of delivering NHS pharmaceutical services,” as well as whether community pharmacy businesses are sustainable under the current funding model.
The results were considered in negotiations over the two-year community pharmacy contract, the details of which were published on 31 March 2025.
The “full economic costs” refer to all costs associated with the provision of NHS pharmaceutical services, including “pharmacy-level costs”, such as staff and building costs; centralised costs relating to a pharmacy’s hub or head office; and ‘hidden’ costs, such as owners’ time that is not charged to the company.
The review found that out of 10,797 pharmacies in England, 10,717 (99%) had funding that was less than the full economic cost of delivering NHS pharmaceutical services.
Of these 10,717 pharmacies, 8,469 pharmacies (78%) had funding that was lower than pharmacy-level and centralised costs.
“Within these 99% of pharmacies, NHS pharmaceutical services are not sustainable in the long run (with 78% of pharmacies being unsustainable in the short run),” the review said, defining the ‘long run’ as between three to five years.
“There is a significant risk of interruption to NHS pharmaceutical services offered in these pharmacies, due to closure of these pharmacies, or due to operational pressures leading to a reduction in quality or scope of services provided.”
It added that the full cost of providing NHS pharmacy services across England in 2023/2024 was between £4.3bn and £5.7bn.
“We estimated that full economic cost exceeded funding, across England in the 12 months to 31 March 2024, by £1.642–£2.975bn. Considering only pharmacy-level and centralised costs, these costs exceeded funding by £0.249–£1.160bn,” the review said.
“This suggests that current funding does not cover those costs, which more indirectly affect sustainability (99% of pharmacies), and do not cover those costs which directly affect sustainability most of the time (78% of pharmacies).”
NHS England agreed to commission an economic review of pharmacy as part of ‘Community pharmacy contractual framework’ (CPCF) negotiations with Community Pharmacy England (CPE) in 2022.
Frontier Economics and IQVIA independently conducted the study between April 2024 and January 2025.
Commenting on the review, pharmacy minister Stephen Kinnock, said: “This stark analysis shows community pharmacies have been driven to the brink of collapse by years of underfunding and neglect.”
In a statement to The Pharmaceutical Journal, CPE said: “The analysis underlines the critical pressures that pharmacies are under, as we have been warning for many years… We are continuing to stress that this is an extremely anxious time for pharmacy owners.”
Nick Kaye, chair of the National Pharmacy Association, said: “This report shows the sheer scale of the financial crisis in community pharmacy that the current government has inherited and reflects the urgent issues our members have faced over the past decade to support millions of people in our communities.”
Malcolm Harrison, chief executive of the Company Chemists’ Association, said: “We hope that these stark findings will help to bring about lasting change to the direction of travel for pharmacies in England.
“A strong community pharmacy sector is vital for maintaining patient access to medicines and urgent care, and as such to wider national economic growth.”
Leyla Hannbeck, chief executive of the Independent Pharmacies Association (IPA), said: “The report paints a stark picture and confirms what [the] IPA already knew and have widely aired in the media for nearly two years: community pharmacies are severely underfunded with 99% of pharmacies operating at a loss. The unsustainable pressures pharmacies face is putting vital patient services at risk.”