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Pharmacy 2021/22 funding stays at £2.592bn, as PSNC’s demand for increase rejected

The total budget for the community pharmacy sector in England will not change for the third year in a row, PSNC has announced, following HM Treasury’s “flat rejection” of its demand for a funding uplift.

The global funding envelope for community pharmacy will remain at £2.592 billion in 2021/22. However, the Pharmaceutical Services Negotiating Committee (PSNC) confirmed that it has won additional funding for a new hypertension case-finding service.

Announcing the key points of the deal today (August 23), PSNC trumpeted the concessions it had obtained from NHS England and NHS Improvement (NHSE&I), the Department of Health and Social Care (DH) and the Treasury, but did not hide its frustration at the Treasury’s “flat rejection” of increasing pharmacy funding.


Lack of extra funding “supremely disappointing”


In a statement, outgoing PSNC chief Simon Dukes said contractors should feel “aggrieved” that the Treasury would not improve funding, especially after pharmacy’s hard work during the COVID-19 pandemic.

“Not to have that reflected in anything other than warm words is frustrating and supremely disappointing,” Mr Dukes said.

The government’s “insistence that we remain at £2.592bn for a further year will bring financial tensions as we move through the autumn and the COVID-19 advance repayments start to bite”, he added.

In late June, PSNC accepted a deal from the government on pharmacy's COVID-19 costs, whereby the sector will have to pay back the £370 million advance funding. However, pharmacies had until August 15 to submit claims for COVID-related costs.

“The failure of our interlocutors to accept the financial, workforce, capacity and wider cost challenges faced by every part of our sector is unfathomable,” Mr Dukes continued.

“We continue to press for recognition of the financial pressures that community pharmacy is under and, as the pandemic slowly recedes, underline to the government how much worse things could be right now, were it not for the performance of our sector.”


Key changes in the coming deal


The new funding deal will see the introduction of two new advanced services, for smoking cessation and hypertension case-finding – the latter of which PSNC said it was “pleased” to have gained funding for outside of core pharmacy funding.

PSNC also secured a “catch-up” provision within the new medicine service (NMS) for patients who may have missed out on support due to the COVID-19 pandemic.

Transitional payments – which were introduced in 2019 with the five-year deal to support the sector's move to a more “service-based” role and were planned to cease at the end of this funding year – have been extended for a further year due to disruption caused by the pandemic. The extended payments have been agreed on the basis that they will support contractors as they engage with primary care networks and integrated care systems, and consider digital transformation and dispensing efficiencies, PSNC explained.

Mr Dukes described protection of the transitional payments as “critical”, adding: “We know contractors need this money now more than ever.”

Other changes include:

  • more realistic targets for contractors in the Pharmacy Quality Scheme (PQS) and new services
  • concessions around regulations, to make changes more manageable for contractors
  • a revised Pharmacy Access Scheme (PhAS) with payments based on a bell curve of dispensing volume
  • change to NHS Regulations to include a pandemic provision
  • amending the market entry provisions so that NHSE&I may refuse any application that results in an oversupply of essential services
  • commissioning Health Education England (HEE) to provide a three-year training programme for community pharmacy professionals, including independent prescribing training for existing pharmacists.

From 2022/23, HEE will also support the management of the training places in community pharmacy and responsibility for administration of payments to community pharmacy contractors for trainee pharmacists.

Initial details of the new PQS – which will officially begin on September 1 – were released on August 12 so contractors could get a “head start on preparation”, with a funding pot of £75m.

PSNC said a “key win” had been reducing the scope of the scheme. Mr Dukes stated: “The first drafts of the scheme would not have been do-able for many pharmacies,” while independent contractor and negotiator Jas Heer said the initial scope “would have made hearts sink”.


Areas left on the negotiating table


PSNC described the three-month negotiating period, delayed by the pandemic, as “intensive”, during which the negotiating team “fought hard to gain concessions on a number of key issues”. The PSNC committee voted to accept the deal “by an overwhelming majority”, it said.

Negotiations on the funding year 2022/23 are anticipated to start during the autumn, once the body has completed its annual review process.

PSNC noted that, particularly with the upcoming repayment of the COVID-19 advance funding, “COVID-19 has increased some operating costs irreversibly – we will continue to lobby on this both through the negotiations and more widely through parliament and the media”.

Mr Dukes previously described the agreement on the COVID-19 advance funds as “not exactly what we wanted but it’s as good as we’re going to get”. He later wrote that “there is more to do. Now that contractors have claimed their COVID-19 costs, we will be discussing cashflow and the recovery of the £370m advance payments with the DH”.

Today’s funding deal also commits PSNC, the DH and NHSE&I to progressing discussions on implementing reforms to reimbursement, and the DH will be seeking “urgent resolution” with HM Revenue & Customs so that services delivered under pharmacist supervision are VAT exempt.

Discussions will continue on the regulation of dispensing and supply of medicines, and exploring how pharmacies can help improve palliative care medicine access.

Mr Heer said: “The outright rejection of our bid for a funding uplift presents issues for us all. But while the views of NHSE&I and the Treasury about our sector were disheartening […] it has been encouraging to see how much compromise we have been able to get to on some critical topics.”

Clare Kerr, head of healthcare policy and strategy at McKesson UK and a member of PSNC's negotiating team, added: “The pressures on our finances and teams continue, not helped by the current levels of COVID-19 in the community, and this needs to be addressed via the annual review process that we are now working through. We will also keep lobbying for the funding uplift that pharmacies so urgently need.”

What do you make of the outcome of PSNC's negotiations for year three of the five-year community pharmacy contractual framework?

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