In my March column, I wrote about the unwelcome prospect of community pharmacy contract negotiations leading towards industrial action. However, it seems that the newly agreed two-year pharmacy contract has taken that prospect off the table.
Community Pharmacy England (CPE) announced that overall funding for community pharmacy would rise in 2025/2026 to more than £3bn per year for the first time. In year one, extra funding includes £215m for the continuation of Pharmacy First; an increase in the single activity dispensing fee of 19p to £1.46 per item; and an increase in the annual margin allowance for community pharmacy from £800m to £900m.
Pharmacy First and contraception consultation fees increased to £17 and £25, respectively, and a new intermediary band for the Pharmacy First monthly payment has also been agreed. On top of the £617m funding boost, the government has also agreed to write off £193m of debt for pharmacy owners.
This is good news. The decline of the community pharmacy sector over recent years is something I have chronicled since way back in June 2023.
Not a magic bullet
Reality remains, however. This extra investment of £617m over two years is not going to reverse the decline or solve the sector’s broader problems.
An NHS-England-commissioned economic analysis of pharmacy, published in March 2025, found that just under half of community pharmacies did not make a profit in the past financial year; and almost all were funded below their full economic running cost.
The Labour Party has had a less-than-orderly few months when it comes to health policy
In the same month, the total number of retail-in-premises community pharmacies in England dropped below 10,000, according to the latest data from the NHS Business Services Authority. The data show that, at the end of March 2025, England had 9,999 community pharmacies (excluding distance-selling pharmacies). This is down from 10,837 pharmacies at the beginning of 2021, meaning more than 800 pharmacies have closed their doors in the past four years.
Another factor that will have an impact on the business model of community pharmacies will be the rises in national living wage and employer national insurance contributions from the start of April 2025.
Better than nothing
Nonetheless, the funding is a decent-sized step in the right direction. Moving community pharmacy some way towards economic stabilisation is a tangible sign of the Labour Party’s ‘triple shift’ towards community-based and preventative care in action — and this is also good.
However, the Labour Party has had a less-than-orderly few months when it comes to health policy. In January 2025, health secretary Wes Streeting told the Health Service Journal that he was not going to abolish NHS England, but just three months later, he and prime minister Keir Starmer announced exactly that abolition.
On 8 April 2025, the national media reported on what Labour’s new national ‘neighbourhood health service’ will look like in practical terms. These highlight some promising local initiatives, which will require curiosity about the real cause of their effectiveness, if proven.
The same must be true of the announcement that some advanced services offered by community pharmacies will expand under the new contract. This includes the addition of emergency hormonal contraception to the pharmacy contraception service and the inclusion of depression in the new medicine service from October 2025.
However, data obtained by The Pharmaceutical Journal on 9 February 2025, following a freedom of information request to NHS England, show that 1,539 (15%) of the 10,555 pharmacies in England have stopped providing at least one of five advanced services (Pharmacy First, the contraception service, hypertension case-finding service, smoking cessation service and the lateral flow device service) since 2021 — all of which were launched under the previous pharmacy contract.
New ‘bundling requirements’ coming into effect from June 2025 under the new contract will mean that to get the monthly Pharmacy First payment, as well as hitting a monthly consultation target, pharmacies must be registered to provide the pharmacy contraception and hypertension case-finding services.
From October 2025, pharmacies must also deliver at least one ambulatory blood pressure reading per month, and, from March 2026, they must deliver a specific number of contraception consultations per month, which is yet to be agreed by CPE and the government.
NHS England has also suggested that community pharmacies might play a crucial role in delivering catch-up HPV vaccinations to supplement the patchiness of the national programme.
Does the sector still have the capacity and capability to deliver this expansion of advanced services after years of retrenchment and cuts? We shall see.
Andy Cowper is the editor of Health Policy Insight
