Chemist + Druggist is part of Pharma Intelligence UK Limited

This is operated by Pharma Intelligence UK Limited, a company registered in England and Wales with company number 13787459 whose registered office is 5 Howick Place, London SW1P 1WG. The Pharma Intelligence group is owned by Caerus Topco S.à r.l. and all copyright resides with the group.

This copy is for your personal, non-commercial use. Please do not redistribute without permission.

Printed By


Everything you need to know about the 5-year pharmacy funding deal

The five-year funding settlement for England pledges to shift the focus from dispensing to clinical services. C+D unpacks how this could affect your pharmacy

Funding will remain at its reduced level of £2.592 billion per year for the next five years, according to the pharmacy contractual framework for 2019-20 to 2023-24, published on July 22.

The contract marks the conclusion of negotiations that began in April between the Pharmaceutical Services Negotiating Committee (PSNC), NHS England and the Department of Health and Social Care (DH).

The sector had heard the future of the medicines use review (MUR) service, the healthy living pharmacy (HLP) programme and the possibility of a national minor ailments service were all up for negotiation, as well as funding to help with the implementation of the Falsified Medicines Directive (FMD), and a multi-year contract to provide contractors with some certainty for the future.

The final deal addressed all of these, in one way or another, and included a few surprises for good measure.

So how exactly will pharmacy funding in England change, and how will this affect your pharmacy? Read on to find out.

Click on the bullet points below to jump to the relevant part of C+D’s guide to the contract:

Dispensing funding will reduce

While the overall global sum will remain at £2.592bn per year until 2024, how funds will be distributed will be negotiated on an annual basis. PSNC says: “This means that much of the detail, particularly for later years of the settlement, is yet to be finalised.”

The government expects the level of funding for dispensing will reduce over the course of the five years, by an amount that has not yet been agreed, “as new technology and transformation is enabled”. Any funding released will go towards further service provision, it stressed.

The “balance between spend on dispensing and new services” will also be reviewed and negotiated on an annual basis, the DH explains, to help “create the capacity and funding necessary to deliver the wider shift towards…service delivery”.

Establishment payments

Establishment payments will be phased out entirely – as per the government’s announcement in 2016. A total of £164m of the global sum was allocated for this in 2018-19, reducing to £123m in 2019-20, the DH outlines.

The precise end date for these payments is yet to be decided, and while some pharmacies may still receive funds into 2020-21, “they will definitely have ceased by 2021-22”, the DH says.

In its briefing about the deal, PSNC points out that the money will be reinvested in delivering services, but acknowledges that offering these services will add to pharmacies’ workload.

MURs decommissioned

In recognition that NHS England “does not consider MURs to be offering good value for money”, the service will be decommissioned by April 2021.

Pharmacies are only able to receive payment for 250 reviews carried out in this financial year, and 100 for the next. MURs will be replaced by structured medication reviews, which it claims are “more clinically effective for patients”. These will not be carried out by community pharmacists, but by “clinical” pharmacists working in primary care networks (PCNs). Funding will be “recycled” into the funding contract to pay for other new services (see below).

Further details on the final MUR target groups will be published before October.

In 2020-21, a medicines reconciliation service will be introduced in pharmacies – for which funding is not mentioned – “to ensure that changes in medicines made in secondary care are implemented appropriately when the patient is discharged back into the community”, the DH says.

The DH will also look to expand the new medicine service (NMS) over the course of the five years, to include further conditions. For example, PSNC is “keen” to add antidepressants to the service.

Pharmacy Quality Scheme

The funding for the Quality Payment Scheme (QPS) will remain at £75m per year, but it will receive a new title: the Pharmacy Quality Scheme (PQS), with some requirements for contractors to meet (see below).

Explaining the name change, PSNC says it would “rather see pharmacies being linked with quality, rather than quality in pharmacies being linked to payments”. The aim was therefore to improve the perception of the scheme by patients, other healthcare professionals, local commissioners and the government.

The first review date for pharmacies to show they have met the new PQS criteria is February 2020. The full guidance – including the number of points contractors need to earn for each activity – are yet to be confirmed.

PSNC says it is “very concerned” that there will only be a few months for contractors to meet the new PQS criteria and receive payments, and it is pressing the DH and NHS England to make more details of the requirements available as soon as possible.

In the meantime, contractors can apply for “aspiration payments” – up to 70% of the funding they earned as part of the 2018-19 QPS – which will be paid by the end of November this year.

New PQS criteria

There are four amended gateway criteria that pharmacies must meet to be eligible for PQS payments:

  1. Offering flu jabs and/or the NMS
  2. Staff must be able to send and receive NHSmail from their shared premises mailbox
  3. NHS website profiles must list accurate opening hours, services and facilities
  4. At least 80% of pharmacists, pharmacy technicians and locums at the pharmacy must have achieved level 2 safeguarding status for children and vulnerable adults in the last two years.

A full breakdown of the criteria can be found on the PSNC website.

Once these have been accomplished there are several changes to the secondary criteria, on “quality”, which contractors need to achieve to receive funding – these determine how much money pharmacies will receive.

This year they are in “bundles”. Pharmacies will need to meet all the activities in a “bundle” to receive the payment for that group.

The six “bundles” are:

  1. Risk management and safety, including 80% of pharmacy professionals completing both sepsis and look-alike, sound-alike errors training
  2. Medicines safety audits, including advice for patients taking lithium, advice for girls and women of childbearing potential taking valproate, and advice for those aged 65 years and above taking nonsteroidal anti-inflammatory drugs
  3. Prevention, including having all staff qualified as Dementia Friends, asking diabetes patients if they have had foot and eye checks, and limiting the sale of sugar-sweetened beverages to 10% of all drinks sold
  4. Primary care networks (PCNs). Pharmacies in a PCN must agree a single channel of communication; for example, by appointing a lead representative
  5. Asthma. Contractors must prove staff have helped patients with certain inhalers
  6. Digital enablers, including updating the pharmacy’s NHS 111 directory of service profile and demonstrating access to the summary care record.
New essential terms of service

Some of the components of the QPS will be part of the quality criteria of the PQS until April 2020, when they will become part of community pharmacies’ essential terms of service. These include having access to both NHSmail and the summary care record, improved pharmacy profiles on the NHS 111 directory of services and NHS.UK, the ability to process electronic prescriptions, and becoming a level 1 healthy living pharmacy.

Will I still be eligible for the Pharmacy Access Scheme?

The Pharmacy Access Scheme (PhAS) – introduced in 2016 to help protect pharmacies situated a mile or more from another by road from the “full effect” of the funding cuts – will retain the same level of funding of £24m per year until next March.

The government plans to “introduce a new and updated PhAS that is more responsive to changes within the market and takes into account the shift in funding from dispensing to clinical services”.

A total of £24m a year has been provisionally allocated from the global sum to fund PhAS for the next five years, with further details expected to be announced in October.

More money for services

The contract lays out funding for some yet-to-be-decided “future clinical services”, jumping from £69m in 2019-20 to £245m in 2021-22, with money moved over from the phasing out of MURs and establishment payments. This includes a monthly “transitional payment” for the first two years of the contract, to “support preparations for a more service-based role”.

This payment will be paid to pharmacies relative to their dispensing volume. PSNC told C+D more information will be available before the publishing of the October drug tariff.

These “transitional” payments will “recognise pressures in relation to engagement with local PCNs, implementing new working practices and staff training to support new services, as well as ongoing change, such as the move to universal HLP status, preparation for serious shortage protocols and the introduction of the new Falsified Medicines Directive”.

PSNC says contractors should be “mindful of the fact that the impact of any funding changes on an individual pharmacy can vary significantly depending on the pharmacy’s prescription item mix”.

A total of £10m from the global sum has been allocated as a contingency for pharmacies to dispense medicines under a serious shortage protocol, for which they will be paid £5.35 per item. However, should this never happen, it would be paid to contractors as part of “transitional payments” from February 2020.

Will there be any new nationally commissioned services?

A community pharmacy referral service will be rolled out nationally from October. The Community Pharmacist Consultation Service (CPCS) will see pharmacies across England receive referrals from NHS 111 for minor illnesses – such as rashes, constipation and vaginal discharge – and urgent medicines supply.

There will be a payment of £900 for pharmacies who sign up to deliver the CPCS by December 1, and £600 for those who do so by January 15, with pharmacies receiving £14 per consultation. It replaces the Digital Minor Illness Referral Service (DMIRS) and NHS Urgent Medicine Supply Advanced Service (NUMSAS).

The DH plans to expand this service over the course of the five years to include referrals from GP practices, NHS 111 online, urgent treatment centres and possibly A&E departments. Funding from the global sum has been reserved for developing this service until 2023-24. The Pharmacy Integration Fund – which was set aside by the government in 2016 to be invested in “transforming how pharmacy will operate in the NHS” – will also be used to develop training for pharmacists involved in the service and the IT systems required.

PSNC will publish income tables on its website to help contractors work out how much they could earn from the CPCS, but it acknowledges that the service “poses new challenges” in predicting workflow and payments.

Hepatitis C testing

Funding has been set aside for a pharmacy hepatitis C testing service for people using needle and syringe programmes. This money is “likely” to only last for a limited period, to support the national programme to eliminate the condition.

There is £2m allocated for the service from now until next March, and another £2m for the following 12 months. However, should it continue afterwards, it would be paid for under the “future clinical services” funding.

What other services are in development?

Pharmacies will play a part in “putting prevention at the heart of the NHS”, according to the contract. To achieve this, the government will use the Pharmacy Integration Fund to pilot a range of additional prevention and detection services, which, if found to be effective, could be rolled out nationally.

These could include:

  • A model for detecting undiagnosed cardiovascular disease
  • Stop smoking support referrals from secondary care
  • Point-of-care testing around minor illness, to support efforts to tackle antimicrobial resistance
  • Monitoring patients to diagnose cancer early, tackle health inequalities and help those taking oral contraception.
DH encourages merging

Worryingly – although perhaps unsurprisingly – the DH still believes that more pharmacies need to close. It wants to make it easier for contractors to merge pharmacies with others nearby, closing one of them, by amending pharmacy regulations. It says the contract “is still supporting more pharmacies in some places than may be necessary to ensure good access to NHS pharmaceutical services”.

To enable contractors to “consolidate” by merging, the DH is looking to “remove any unnecessary administrative requirements to reduce the regulatory burden on service providers”. These may include simplifying prescription endorsing requirements and ending routine opening hour requirements, it says.

The DH is not prepared to discuss how many pharmacies it expects to close, PSNC says, though the negotiator believes the “government’s view on pharmacy clusters remains unchanged”. The DH used the term “clustering” to justify the 12% cut to pharmacy funding in England in 2016, claiming that “40% of pharmacies are in a cluster where there are three or more pharmacies within 10 minutes’ walk”.


The DH will also seek to change legislation so that independent pharmacies can operate a hub-and-spoke dispensing model. For them to achieve the “expanded role” and provide new services “we need dispensing to become more efficient to free pharmacists up”, the DH says.

The government also pledges to “explore and implement greater use of original pack dispensing” to support the wider use of a hub-and-spoke model.

The hub-and-spoke changes are part of a wider push by the DH to enable new technology, which it says is an “inevitability”, to “transform” medicines supply and pharmacy services. It claimed that contractors should see technology as an “opportunity” not a “threat”.

Responsible pharmacist changes

Alongside this technological agenda, the DH will propose legislative changes to “allow for better use of the skill mix in pharmacies and enable the clinical integration of pharmacists”, it says.

PSNC says it has not seen any analysis or fully fledged proposals, but has “agreed to have the conversation” around the role of the responsible pharmacist, for example, allowing them to leave the pharmacy during core hours to engage in PCN work.

Medicines reimbursement

The DH has committed to “a range of reforms to reimbursement arrangements to deliver smoother cashflow, and fairer distribution of medicines margin and better value for money for the NHS”.

In a public consultation launched on July 23, the DH’s proposals include: changing how medicines prices are set; including more products prescribed for medicinal purposes in the drug tariff; and splitting the discount deduction scale into one for generics and one for brands.

DH and PSNC negotiations

The contract was the product of “hundreds of hours of negotiations” over the course of months, PSNC says. It stresses that the DH had “fully expected” to cut pharmacy funding further and it feels that freezing the funding for five years was the “best scenario” possible.

There had been only a “short window of opportunity” to conclude the deal, due to the DH’s priorities of Brexit preparations and the Conservative party’s leadership election race. Consequentially, much of the details have not yet been worked out. If PSNC had failed to finalise the deal in July, “we risked negotiations being delayed for many more months, as well as the shared vision for the future being overturned by new ministers”.

PSNC has “much to do over the coming months and years to persuade new ministers, including those at HM Treasury, of the value for money that our new services are delivering”.

Not all PSNC committee members were in favour of the deal, PSNC admits, “given the considerable asks that it makes of community pharmacy”. But more than two-thirds of members did eventually sign off the funding settlement.

What’s next?

PSNC has not sought a completely new funding model, as it was “concerned about the impact of making radical changes too quickly, particularly as up to 90% of some contractors’ income comes from the NHS”, it explains.

The negotiator cannot say what happens to pharmacy funding after this five-year deal, as it will depend upon the economic situation and the success of new services, it says.

The DH says the annual review, which will take place “in the autumn” every year, will include evaluating pilots and phasing in national services. Contractors will be updated on an ongoing basis as discussions continue.


Pharmacy Manager
Newquay, Cornwall
£ Competitive

Apply Now
Latest News & Analysis
See All



Ask The Analyst

Please Note: You can also Click below Link for Ask the Analyst
Ask The Analyst

Thank you for submitting your question. We will respond to you within 2 business days. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts