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Funding settlement is "a total disaster"


Funding settlement is "a total disaster"

The new contract is simply part of the DHSC plan to force closures, says Sheffield pharmacist Chris Armstrong

The funding settlement PSNC has negotiated is a total disaster financially for contractors. Flat funding for the next five years is basically a 15 per cent funding cut due to predicted inflation.

This is at a time when all other costs are rising, such as the national living wage and associated differentials, mandatory auto-enrolment with employers’ pension contributions and rising business rents and rates, to name but a few. Added to the funding cuts of 2016-18 and allowing for inflation, the pharmacy global sum will have been reduced in real terms by about 25 per cent by 2024.

How are contractors supposed to cope with that? In truth, they are not. The Department of Health and Social Care believes that there are too many pharmacies and is continuing to try to force closures using this settlement.

Anyone who was hanging on in the hope of improved funding will have been very disappointed and will now be making plans to exit.

The DHSC vision is for fewer, but busier pharmacies, carrying out more new services, the majority of which are as yet unspecified. We are already carrying out many extra duties for which we are not paid, such as the printing and sorting of EPS prescriptions, which can take hours a day, not to mention the toner cartridges and printer drums for which we are also not paid. All this work used to be carried out in GP surgeries, but we are now doing it – and for free!

Apparently we will also be expected to carry out patient prescription exemption checks soon. You can bet we won’t be getting paid for that either.

Smallest hit hardest

It is mainly smaller contractors who will initially feel the new settlement most acutely. All elements of front loading the contract to support the costs of smaller contractors have been removed. The loss of establishment and MUR payments will rob all pharmacies of up to £27,000 per year. For a pharmacy dispensing 5,000 items a month, it could mean a loss of up to a third of its fees.

Another worrying part of the settlement is the statement that the amount paid for dispensing will decrease over the length of the contract. If the DHSC is serious about wanting to see increased use of hub and spoke and automation in the dispensing process, then how does it think that reducing the dispensing fee will encourage investment in this technology?

No one in their right mind would invest with a reducing return on investment such as this. It must also be borne in mind that if the dispensing fee is reduced too much, patients may find it difficult to find a pharmacy willing to dispense their prescription, or a pharmacy that keeps the medication in stock, especially if it is for an expensive item.


Looking at the settlement overall, it is a massive disincentive for any pharmacy contractor to invest anything into their business. Even a modest 1 or 2 per cent per year uplift would have given contractors reason for optimism and an opportunity to start to invest in their businesses again, such as staff training or new technology. That is out of the question now.

From the funding cuts in 2016 to the end of this contract is nine years. That’s nine years of zero investment in the community pharmacy estate by its contractors.

The Government statements about wanting to encourage patients to use pharmacies instead of GPs or A&E look pretty hollow in the face of this terrible settlement.

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