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Pharmacies struggle to pay suppliers after 20% funding drop

Contractors are struggling to pay wholesalers and staff as a result of an unexplained 20% drop in payments from the government, C+D has learned.

Last Friday, C+D exclusively revealed that the Pharmaceutical Services Negotiating Committee (PSNC) is investigating "concerns" from contractors experiencing a drop in payments since December 2016 that are "closer to 20%" , rather than the 12% the negotiator predicted last year.

Speaking to C+D today (June 5), C.J. Patel – who owns five pharmacies in Croydon, London – said the drop in funding “is nowhere near the 12% I was led to believe”.

“We were expecting a £3,000 loss a month, per pharmacy, but it is more like [an average of] £6,000,” he explained.

“Now I might be being a bit simplistic by just looking at the amount of money in my bank account each month, but that is the money I use to pay my suppliers and my staff. If that has gone down, then obviously that impacts my ability to pay these people.”

Mr Patel – who is also chair of Croydon local pharmaceutical committee (LPC) – said his colleagues across London are reporting similar issues.

“One said he couldn’t pay his main supplier with the amount of money he had received,” he said.

Pharmacists took to Twitter over the weekend to share their experiences of the unexpected funding drop.

A "widely reported" problem

Pharmacy London CEO Rekha Shah told C+D the issue has been “widely reported” across the capital.

Commenting on the C+D website, locum pharmacist John Munday said “a 20% cut could easily kill a small vulnerable business”.

“Good businesses trade successfully on the basis that, as far as they can predict, they can anticipate fluctuations in cashflow. They gear their borrowing to cover the leaner times and plan capital expenses according to what they predict they can afford. So where does this leave everyone?” he added.

Numark “aware” of issue

Numark’s managing director John D’Arcy said the group “has been aware of contractors facing funding cuts close to and even exceeding 20%” over the last four months.

“The reason for this is that in real terms, contractors [are] being impacted by...12 months of cuts phased into a four-month period, as well as the introduction of a single activity fee and the impact on [the] establishment fee,” said Mr D'Arcy.

Asked for his own theory for the unexplained funding drop, Mr Patel said: “I’m not sure whether PSNC was misled by the government about the effect of the funding cuts, or whether [the government] has implemented greater cuts than they originally announced.”

Concerns raised on Twitter

Are you experiencing steeper funding cuts than expected?

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