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£15m-a-month category M clawback to have ‘severe’ impact

The latest reduction in category M payments will have a “severe impact on community pharmacy”, Pharmaceutical Services Negotiating Committee (PSNC) chief executive Sue Sharpe has warned.

Category M prices will be reduced by £15 million per month for a 12-month period from August, which will "correct overpayments of retained margin for both 2015-16 and 2016-17", the negotiator announced yesterday (July 18).

This will represent an average drop of around 17-18 pence per item on current drug tariff prices, although the impact on individual pharmacies "could differ" according to their "dispensing mix", PSNC said.

PSNC “considered carefully”

Ms Sharpe said the negotiator considered the Department of Health’s (DH) proposals “very carefully”, before eventually “agreeing unanimously”.

“Spreading the recovery of the excess margin over 12 months is helpful. But as the DH acknowledged, the impact on community pharmacy will be severe in the light of the funding cuts,” Ms Sharpe said.

She stressed that PSNC “scrutinises the DH’s assessments of margin delivery very closely”.

“We also remain concerned about fair access to margin and local manipulation of the market,” Ms Sharpe said. “The DH has recognised these issues and agreed to work with PSNC to resolve them.”

Businesses under pressure

PSNC’s funding and contract subcommittee chair Peter Cattee said: "It is always difficult when the margins survey shows that contractors have received more than the allowed margin in any given year."

This is “particularly the case” in a year in which businesses have come under a "huge amount of pressure", Mr Cattee said.

“PSNC debated this matter for some time, and we felt that the priority was to spread recovery over as long a period as possible,” he added.

The August price list is available on the NHS Business Services Authority website.

The latest clawback follows a £48 million reduction in category M payments between June and September 2016, which Boots' parent company blamed in January for a 0.5% decrease in pharmacy sales.

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How will the category M reduction affect your business?

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