Category M reimbursement prices are to increase by £15 million a month from August, a move the Pharmaceutical Services Negotiating Committee has described as “very positive” and indicative of a good working relationship with the Department of Health and Social Care.

Following negotiations with PSNC, the DHSC agreed to end the category M price reductions for the time being, acknowledging the strain they placed on contractors’ cashflow. These reductions were put in place in August 2017 to recover estimated excess margin given to pharmacies in 2015/16 and 2016/17.

There remains excess margin from 2016/17 that the DHSC must recover. PSNC says this will be discussed in the coming months.

Prices up 16 per cent

Reimbursement prices, which PSNC has put online, have risen by an average of 16 per cent for the month of August, which equates to an increase in the average item value (AIV) of between 19 and 20 pence per item on all items.

PSNC says that in October there will be a new Drug Tariff based on manufacturers’ data, and that “at the moment the timing or quantum of any future adjustments is not known”.

PSNC director of pharmacy funding, Mike Dent, said: “The decision to cease margin recovery in the short term in light of PSNC’s representation about contractors’ cash flow is very positive and reflective of the collaborative relationship that we are trying to rebuild with the DHSC.

“PSNC will be working, through the negotiations on funding and in discussions with the Department, to get the best possible deal for contractors and to ensure that any future mechanisms to correct margin delivery are as manageable as possible in terms of cash flow.”