The Pharmaceutical Services Negotiating Committee (PSNC) has announced that transitional payments for community pharmacy contractors, valued at an estimated £2.5m per month, will end from February 2023.
The payments were first introduced as part of the five-year ‘Community pharmacy contractual framework’ (CPCF) for 2019 to 2024, to help contractors prepare “for a more service-based role, paid at a level linked to prescription volume”.
They were initially expected to end in 2020/2021, but the PSNC negotiated an extension of the payments until the end of the contract, as part of its agreement for years four and five of the framework.
A statement published by the PSNC in October 2022 said the transitional payments to pharmacies in England would gradually reduce from a total of £16.5m per month to £14.0m in October 2022, £12.5m in November 2022, £7.5m in December 2022 and then to £2.5m per month for the remainder of the contract.
However, the PSNC said in a statement on 23 January 2023 that the Department of Health and Social Care (DHSC) “has decided to reduce the transitional payment to zero from February 2023”, with the decision “based on the latest monitoring and analysis of funding delivery”.
The statement added that the payments were ending because new services have been introduced for community pharmacy “and their uptake has accelerated, using up the unallocated CPCF funding” that was used to make the transitional payments.
It added that “a new flat payment will be introduced in 2023/24, funded from the unallocated CPCF funding”.
Janet Morrison, chief executive of the PSNC, said the DHSC’s “removal of the transitional payments could not come at a worse time for community pharmacy businesses, who, by the government’s own admission, have been subjected to years of funding cuts”.
“Pharmacies are on the brink of collapse and removing these payments now may be the final straw for some: we have made that absolutely clear,” she said.
Figures published by the government in January 2023 showed that community pharmacies in England have lost £1.6bn in funding since 2015/2016, owing to increases in inflation.
Meanwhile, in a report commissioned by the National Pharmacy Association, published in September 2022, authors warned that high inflation could see “several thousand English community pharmacies” close without additional government funding.
Leyla Hannbeck, chief executive of the Association of Independent Multiple Pharmacies, said the DHSC’s decision “is yet another kick in the teeth for this hardworking sector who are already struggling due to the financial hardship”.
“It’s an unmanageable reduction and, along with the rise in national living wage in April , will cause further breakdown of infrastructure,” she said.
“Government and commissioners are clearly determined to reduce the size of the network by economic attrition and keep pharmacies on life-support to prop up the supply service, rather than any planned or joint approach.”
The Department of Health and Social Care was approached for comment but did not respond in time for publication.