‘Brutal’ impact on pharmacies likely from Category M reimbursement price cut

Sue Sharpe, chief executive of the Pharmaceutical Services Negotiating Committee (PSNC)

Category M reimbursement prices are to be reduced again, and “the impact on community pharmacy will be severe,” chief executive of the Pharmaceutical Services Negotiating Committee (PSNC), Sue Sharpe, has warned.

The PSNC announced (18 July) that Category M reimbursement prices will be lowered from August by £15m per month for a 12-month period. It said these reductions were “to correct overpayments of retained margin for both 2015/16 and 2016/17”.

This will mean a drop of around 17% or 18% per item in average item value from current drug tariff prices, but the effect on individual pharmacies will vary according to the dispensing mix, the PSNC said.

National Pharmacy Association chair, Ian Strachan, said the changes would “feel like a body blow” to many independent pharmacies.

“We are sure that PSNC is doing its utmost, in challenging circumstances, to limit the impact this claw back,” he said.

“Nonetheless, this is brutal, especially as it comes on the back of massive funding cuts.”

Margins analysis by the Department of Health (DH) and PSNC — which are based on data from the independent sector — identified “substantial excess margin” for 2015/16 and 2017/18 and while the exact sum for 2016/17 will not be settled for another few weeks, the PSNC said it “accepted the adjustments proposed”.

Sharpe said: “PSNC considered the proposal from the DH very carefully in light of the available margins survey analysis, eventually agreeing it unanimously.

“Spreading the recovery of the excess margin over twelve months is helpful, but, as the DH has acknowledged, the impact on community pharmacy will be severe in light of the funding cuts imposed last year, which have already hit contractors’ income.”

Sharpe said the PSNC scrutinises the DH’s assessments of margin delivery “very closely” to ensure that the agreed margin is delivered each year and that it also monitors price adjustments to ensure they are implemented correctly.

She also expressed her concerns about this latest reduction to Category M reimbursement prices.

“Over many years, we have seen that price volatility operates to preclude any real possibility of delivery of the exact agreed sum of margin in year,” she said.

Strachan said the current system was “not fit for purpose”.

“We urgently need a new funding model which offers more certainty and reflects the risk that contractors take when they invest in premises, staff and services,” he said.

Last updated
The Pharmaceutical Journal, PJ, August 2017, Vol 299, 7904;299(7904):DOI:10.1211/PJ.2017.20203252

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