Government outlines plans for community pharmacy in England following cuts announcement

Department of Health reveals efficiency plans to slash £25k annual establishment payment to encourage the closure of some pharmacies.

Details are starting to emerge about the government’s plans for the future of community pharmacy in England, as part of a consultation exercise that runs until 24 March 2016. In the image, a pharmacist in the counter

Details are starting to emerge about the government’s plans for the future of community pharmacy in England, as part of a consultation exercise that runs until 24 March 2016.

To help achieve savings within the pharmacy budget, the government wants to simplify the NHS pharmacy remuneration payment system. Under the proposals, the government plans to phase out the £25,000 annual pharmacy establishment payment to encourage pharmacy chains to review and close some of their outlets.

The proposals, outlined in a set of slides published by the Department of Health on 27 January 2016, will be finalised in April and implemented in October.

“The current system is complex and does not promote efficient and high quality services,” the slides say. “For example the establishment payment – of around £25,000 per year – is received by all pharmacies dispensing 2,500 or more prescriptions a month, a relatively low prescription volume. This incentivises pharmacy business to open more NHS funded pharmacies, adding costs to the taxpayer. We therefore propose the establishment payment is phased out over a number of years.”

The consultation was announced in a letter to the Pharmaceutical Services Negotiating Committee (PSNC) in December 2015, informing the PSNC that there would be a 6% cut to the pharmacy budget, reducing it from £2.8bn in 2015–2016 to £2.63bn in 2016–2017. Online dispensing and ‘hub-and-spoke’ dispensing models will be encouraged, and medicines will be available on longer prescriptions. Many community pharmacies are expected to close as a result of the changes — possibly as many as one in four.

Writing in a foreword to the government’s proposals, also published on 27 January 2016, England’s chief pharmaceutical officer Keith Ridge says the direction of travel that the government is setting is not new and builds on ideas and input from across the sector.

“The ‘Now or never’ report from the Nuffield Trust, [published in] November 2013, highlighted that if real change was to be achieved for improving patient-centred care it needed to continue to change the balance of funding from dispensing and supply towards medicines optimisation and the provision of new care models,” says Ridge. “Integrating community pharmacy and the wider workforce into primary care was identified as a key enabler to achieve this.”

He adds that the proposed changes will support the integration of community pharmacy within primary care and help to address the increasing workload in general practice.

“I do not believe we have the right infrastructure and the right skills in the right place to be able to achieve integration, and I am determined that we change this,” says Ridge. The aim of the new pharmacy integration fund (PhIF), announced in December, is to rectify this. The fund will be worth £20m in 2016–2017, and will rise by £20m per year, meaning that by 2020–2021 £300m will have been invested.

In the first year, the PhIF will focus on supporting the deployment of clinical pharmacists in a range of community care settings, including GP practices, multi-speciality community providers, urgent care hubs, care homes and NHS 111. “This will be fundamental to fully integrating community pharmacy into the NHS through the creation of clinical and professional links to community pharmacists, together with referral pathways,” the slides say.

The PSNC initially said that it will not negotiate with the government over the planned funding cuts until the government reveals more details of its long-term plans.

“Until this week, communications have been silent on how the NHS intends to develop the clinically focused service that it states as its aim,” Sue Sharpe, chief executive of the PSNC, said on 22 January 2016, after being sent the slides. “We have been clear that cuts to pharmacy funding that will force contractors to cut staffing is about the worst way to do it. We have made this point forcefully and are bringing forward our own proposals.”

The number of pharmacies has increased by almost 20% between 2003 and 2015 (from 9,748 to 11,674), and 40% of pharmacies are within ten minutes walk of two or more other pharmacies. The government thinks this is too many and wants its efficiency programme to push some to close.

The government does acknowledge, however, that some areas are not overpopulated by pharmacies and plans to put in place a pharmacy access scheme to protect pharmacies in these areas. A national formula will to be used to identify those pharmacies that are the most geographically important for patient access, taking into account an isolation criteria based on travel times or distances, and also population size and needs (age, disability, deprivation). Qualifying pharmacies will be required to make smaller efficiencies than the rest of the sector.

Last updated
The Pharmaceutical Journal, PJ, February 2016, Vol 296, No 7886;296(7886):DOI:10.1211/PJ.2016.20200591

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