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NHSE economic review chance to ‘prove’ unsustainability of pharmacies

PSNC has said it hopes an upcoming economic review, due to kick off in March, will “prove” to the government that “pharmacies are no longer economically sustainable”.

NHS England (NHSE) last week (January 27) began searching for an independent supplier to undertake a “comprehensive” analysis of pharmacy contractors’ “current financial situation”, a procurement notice revealed.

The “economic analysis of community pharmacy” will use data from pharmacy contractors doing both NHS and non-NHS work, and study various sizes of contractor models in different geographic locations, NHSE said.

NHSE “made a binding commitment” to commission the economic analysis of pharmaceutical services through an independent review in recent negotiations for the final two years of the pharmacy contract – and to work with the Pharmaceutical Services Negotiating Committee (PSNC) on the analysis – it added.

Read more: 'Unprecedented closures': Pharmacy leaders press Sunak for cash injection

Meanwhile, PSNC chief executive Janet Morrison told C+D this week (January 31) that the negotiator has “been telling the government and the NHS loudly and clearly that pharmacies are no longer economically sustainable”.

“We hope that this review will now help prove that to them,” she said.

PNSC’s negotiating team had “pressed hard” for the analysis to be conducted independently during last year’s talks with the government, Ms Morrison added.

“It’s important that contractors are assured of the independence and rigour of the study before they commit to take part,” she told C+D.


March 2023 launch


According to a document accompanying the tender notice, NHSE intends to commission a provider to run the analysis from March 2023.

It anticipated the review would take nine months to complete, setting the maximum budget at £500,000 excluding VAT.

The supplier conducting the review will need to “analyse the costs of delivering various NHS dispensing and clinical services in community pharmacy and consider variation in these costs in different segments of the market”, the document said.

Read more: Health minister moots ‘more funding’ for pharmacy

They will also need to determine “the extent to which services are able to be efficiently delivered from community pharmacy, rather than provided elsewhere within primary care and the wider NHS”, it added.
“These factors should enable NHSE to help with decisions about which services to commission from community pharmacy,” the document said.
“This analysis should help us understand the trajectory of the sector under the current funding model [by] providing information on the relative resilience of these companies, and analyse the risks of market failure, including suspension of services and the possible impact on specific populations, for example with regards health inequalities and deprivation,” NHSE added.
It asked potential bidders to complete the market assessment questionnaire by February 15.


Results will inform future negotiations


PSNC is “in close dialogue with NHS and the Department of Health and Social Care (DH) about the review”, Ms Morrison said, adding that the negotiator had made “clear [the] need to remain so throughout the process”.

Its results will inform future pharmacy contract negotiations, she said.

“We will use the independent findings to press the government and the NHS to take immediate action to help pharmacies become more sustainable,” Ms Morrison added.

She told C+D in September that PSNC is prepared to consider a totally new community pharmacy contractual framework after the current one concludes, as it “doesn’t really make sense as a contractual framework”.

Pharmacy bodies branded years four and five of the funding deal as “hugely disappointing”, “devastating” and “fundamentally under-resourced”.

PSNC also revealed in January that it had kicked off “proper discussions” with the DH about what a Pharmacy First service “might look like”, having failed to get the government to sign off on it in last year’s negotiations.

Read more: 2022: The year of the missed Pharmacy First opportunity, PSNC says

In its tender for independent suppliers to undertake the economic review, NHSE said that its “vision” for the community pharmacy sector involves it playing “an increased role in the delivery of integrated primary care services to support the significant access challenges in primary care”.

“This expansion is essential to release capacity in the wider NHS to address more acute and complex health conditions and to maintain the long-term economic benefit to the NHS,” it added.

The notice said that the information collected by the review will be “critical” to both NHSE and the Treasury to inform any bids or future negotiations.

Read more: APPG calls for ‘urgent action to relieve pharmacy funding pressure’



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