UK government announces two year funding cuts for community pharmacies

2nd November 2016

On 20 October 2016, the government announced the imposition of a two year funding package on community pharmacies. There will be cuts to funding for the remainder of the 2016/17 financial year and in the next financial year. Neil Jones, director and joint head of the pharmacy law team at Ansons Solicitors in Staffordshire, looks at the implications of the new funding package.

From 1 December 2016, there will be a reduction of four per cent in the funding compared with 2015/16 which will take the total funding to £2.687 billion, a £113 million reduction. However, because of the time left to implement the changes, the funding for December 2016 to March 2017 will fall by an average of 12 per cent compared with current funding.

In 2017/18, there will be a reduction to £2.592 billion (a further reduction of £95 million). This means that from April 2017, contractors will see a drop in funding levels of around 7.5 per cent.

Establishment payments will be phased out over a number of years from 1 December 2016. There will be a reduction of 20 per cent from December 2016 and a reduction of 40 per cent from April 2017.

The following payments will be introduced:

1. Single activity fee

This will combine and replace practice payments, repeat dispensing annual payments and monthly employer payment summary payments into one fee. There will be a single payment made per prescription item dispensed – the final fee from December 2016 is not yet known but is estimated to be £1.13 per item.

2. Additional fees

Fees for unlicensed medicines, appliances, controlled drugs and so on, will remain separate fees.

3. Pharmacy integration fund

This will cover the costs of an urgent medicine supply service pilot and an urgent minor illness pilot. The fund will be worth £42 million over the next two years but was originally set at £300 million over the next five years and so the scope of the fund has been considerably reduced. The purpose of the fund is to improve access for patients and relieve the pressure on GPs and accident and emergency departments. Dr Keith Ridge, the Chief Pharmaceutical Officer for England, has confirmed that the extra money available through this fund will not require community pharmacies to do more, and that it is in place in order to modernise the system and change the way things are done over the next five years so that the burden on GPs is minimised.

4. Pharmacy access scheme

This will be introduced from December 2016 and will be an additional monthly payment to small and medium sized pharmacies that are a mile or more from another pharmacy. 1,365 pharmacies have been identified by the Department of Health as eligible. Average monthly payments from December 2016 to March 2017 will be approximately £2,900, and £1,500 per calendar month for 2017/18. The Department of Health estimates that payments will total £16 million for 2016/17 and £24 million for 2017/18.

5. Quality payments

These will be introduced in 2017/18 and will be made to pharmacies meeting certain quality criteria. £75 million of the fund will be allocated to quality payments in 2017/18.

The Pharmaceutical Services Negotiating Committee has strongly advised contractors to make whatever provisions they can for the funding reductions. This may include reducing opening hours and staffing levels and perhaps stopping the provision of services which pharmacies are not obliged to provide and receive no remuneration for, such as delivery and dosette services. This will, of course, have a negative impact on patients but local contractors are being encouraged to work together to ensure that vital services are maintained.

For more advice about pharmacy law contact Neil Jones at Ansons Solicitors in Cannock and Lichfield, on 01543 431184 or email