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AIMp: DH must postpone excess margin recovery as 'ferocious pressures' mount

The government must think twice about going ahead with the mechanism it uses to remove the excess margin on category M products, as community pharmacies battle rising costs, AIMp has warned.

The rising cost of living and COVID-19 costs that have yet to be absorbed are only adding to the “mounting and ferocious pressures” on community pharmacy teams, the Association of Independent Multiple pharmacies (AIMp) CEO Leyla Hannbeck told C+D today (August 12).

The Department of Health and Social Care (DH) should therefore delay recovering any excess margin due to the further strain this would cause, she urged.

The “previous front-loading” of category M should be written off entirely because most of this money “has already been spent in maintaining the service”, Dr Hannbeck added.


Read more: Pharmacy clawbacks are a perverse windfall tax

“Pharmacies need all the help they can get. Theirs is a fast-changing, worsening environment and recognition of that fact would be welcome,” she said.

Dr Hannbeck said AIMp has discussed this suggestion with the DH and raised it with the Pharmaceutical Services Negotiating Committee (PSNC).

The DH told C+D it is currently in negotiations for 2022/23. Currently, community pharmacies in England receive £2.5 billion a year as part of a fixed five-year contract with the government.

The DH referred to this deal as its “joint vision with NHS England and NHS Improvement and the sector, which will see community pharmacies better integrated in the NHS and becoming the first port of call for minor illnesses”.



PSNC pushing for “additional funding”


PSNC director of pharmacy funding Mike Dent told C+D that the negotiator is “well aware” of the financial pressures faced by contractors and warned that “the economic situation is only worsening”.

“PSNC has made the case for additional funding very strongly during negotiations and will continue to do so,” he added.

The government’s decision to inject additional COVID-19-related funding into the sector and to increase the category M reimbursement prices in June 2020 only “masked” community pharmacy’s “flat funding settlement”, Mr Dent argued.

“But the underlying effect is starting to have a severe impact,” he added.

Read more: Category M reimbursement prices to soar by £15m in June, DH announces

“This is a critical situation, and we are determined to do everything in our power to get the support that pharmacies now desperately need,” Mr Dent said.

Similarly, in a recent blog for C+D, the National Pharmacy Association chair Andrew Lane warned that imposing a clawback on pharmacies could come as a “fatal blow” for some.

The community pharmacy sector funding has been set at £2.592 billion per year from 2019/20 to 2023/24. Of this funding, £800 million per year is set aside as “retained buying margin”, which is the profit pharmacies can earn from dispensing.

The DH adjusts the prices of category M products based on information obtained by manufacturers and suppliers, to deliver the £800m margin.

“Contractors are reimbursed for the medicines they dispense each month by the NHS Business Services Authority, less an amount of discount deduction or ‘clawback’”, PSNC wrote on its website.

Last year, the DH proposed some reforms to the way medicines costs are reimbursed to community pharmacies, including a suggestion to avoid that generics with a branded generic alternative appear more expensive.

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