Community pharmacies see £790m real-terms funding cut over five years, government figures reveal

There has been a cumulative loss of almost £800m in funding for community pharmacy over the past five years, as a result of inflation.
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Community pharmacies in England have seen a real-terms funding cut of £790m over the past five years, owing to increases in inflation, government figures have shown.

In 2019, the government agreed to spend £2.592bn on the sector in each of the five financial years covered by the the ‘Community Pharmacy Contractual Framework for 2019/20 to 2023/24’.

However, figures published by the government, in answer to a written question on 20 October 2022, show that, while “nominal funding” of £2.592bn has remained the same since 2018/2019, real-terms funding has decreased to £2.293bn in 2022/2023 — some £300m less than was agreed for the year.

The cumulative loss, owing to inflation, in each of the past five years amounts to £790m (see Table).

The figures, provided by Will Quince, health minister, came in response to a written question from Helen Morgan, Liberal Democrat MP for North Shropshire, who asked the government for figures on the amount of funding “provided to communities pharmacies through the Community Pharmacy Contractual Framework in real terms accounting for inflation in each year since 2019”.

In September 2022, the National Pharmacy Association (NPA) published a report, which warned that high inflation could see “several thousand English community pharmacies” close without additional government funding.

Commenting on the funding figures, Mark Lyonette, chief executive of the NPA, said: “Inflation continues to eat away at the global sum, leaving many pharmacies in a precarious financial position. The drop in funds is actually even bigger than these figures show, because previous cuts were baked into the current five-year deal from the outset.

“The NPA’s recently commissioned study by professor David Taylor of University College London, calculated a 25% cut to date in real terms since 2015, even after adjusting for inflation. Taking a longer view, community pharmacy remuneration in England now accounts for a lower percentage of total health spending than at any previous point since 1948/1949.”

He added that the sector is “already seeing real-life consequences of underfunding, including reduced opening hours to minimise operational costs”.

Community pharmacies are already starting to close owing to “chronic underfunding”, according to pharmacy representatives, with NHS data revealing in October 2022 that England now has the lowest number of community pharmacies in seven years.

Janet Morrison, chief executive of the Pharmaceutical Services Negotiating Committee (PSNC), said: “Contractors across the country are facing severe pressures due to these searing funding cuts. There are a variety of ways to assess the impacts of inflation and other factors on real-term funding, but all methods show a growing and unsustainable decline in funding in real terms, which we are repeatedly highlighting to policymakers, including in our funding bids and wider negotiations and discussions.

“This decline is having a serious impact on the ability of pharmacy teams to provide all of the important healthcare services that their communities rely on. We are seeing this play out in dispensing delays and reductions in services at a time when patients are increasingly turning to pharmacies.”

She added that the PSNC was “extremely frustrated at the government’s resolute refusal to move beyond the five-year deal in recent [contract] negotiations”. 

“We must find a way to turn the dial in pharmacy’s favour and to ensure that the vital service we provide to patients and the health service is recognised and valued in our funding settlement,” she said.

Steven Anderson, group managing director for wholesaler and owner of the Rowlands pharmacy group PHOENIX UK, said the figures were “truly shocking” and show “on the parliamentary record for the first time how severe underfunding of the sector has been”.

He added that, without further funding in the final two years of the pharmacy contract, the loss of funding “could amount to a £1bn reduction in real-term funding over the lifetime of the community pharmacy contract”.

“No wonder we have seen hundreds of random pharmacy closures in recent years and, with inflation running rampant, along with continued flat funding, that closure rate will inevitably hasten rapidly. This makes no sense at a time when the NHS is facing the greatest patient pressures since its inception.”

In an attempt to alleviate funding concerns, the government committed to writing off £100m in excess medicines margin in 2023, as part of its agreement with the PSNC on the final two years of the contractual framework.

Commenting on the funding data, a spokesperson for the Association of Independent Multiple Pharmacies, said: “This shows the impracticality and irresponsibility of this crude mechanism of change by attrition — not only has pharmacy seen these cuts, but it is expected to deal with the current inflationary environment by putting our workforce under pressure. There is no level playing [field] for community pharmacy.”

“Clearly the position is unsustainable and we shall continue to see service degradation as more contractors understand the consequences of these poor and incomplete policies,” they added.

Last updated
The Pharmaceutical Journal, PJ, October 2022, Vol 309, No 7966;309(7966)::DOI:10.1211/PJ.2022.1.163392

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