Category M reimbursement prices are to increase by £15m per month from August 2019, the Pharmaceutical Services Negotiating Committee (PSNC) has announced following discussions with the Department of Health and Social Care (DHSC).
The price increase will help to ensure that the overall amount of margin delivered during the 2019/20 financial year is the agreed annual sum of £800m and should help to ease immediate contractor cashflow issues, the PSNC explained.
The Single Activity Fee will also rise by 1p to £1.27 per item.
“The past few months have been incredibly difficult for many community pharmacy contractors, and this has in part been caused by the need to keep Category M reimbursement prices low following excess margins earned in previous financial years,” said Simon Dukes, chief executive of the PSNC.
“These August price increases are being made to try to correct margin delivery for this financial year and this should bring some relief for contractors.”
Despite the increases, Dukes said the PSNC was concerned about the impact of cashflow difficulties on pharmacies and was pressing the DHSC to make improvements to the funding and margin distribution systems to try to avoid future problems.
“However, within the current funding structures, and with wider negotiations on funding ongoing, the committee felt that an immediate increase in Category M reimbursement prices was the best course of action to ensure that contractors receive all the funding to which they are entitled [in 2019/2020],” he said.
In April 2019, Category M prices increased by £10m, but the April 2019 reimbursement levels were lower than anticipated, which meant that contractors did not see the positive cashflow impact that they expected, the PSNC said.