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‘Recovery infeasible’: NHSE lost £16m in COVID loans due to pharmacy closures

NHS England (NHSE) was unable to recover £15.7 million in COVID-19 support payments due to “a significant number” of pharmacies closing their doors, it has revealed.

Between March and June 2020, NHSE paid £370 million in emergency loans to community pharmacies.

NHSE was “directed” to provide the “urgent uplift” to normal pharmacy advance payments by the government to “ help them stay open to…provide vital NHS pharmaceutical services” amid acute cost pressures due to the pandemic, it said in its 2021/22 annual report.

The payment aimed to buffer pharmacies against “significant and unexpected cash flow pressures” caused by a “sharp increase” in prescription items in early 2020.

It also cushioned them against “higher drug prices, delayed payments for the Pharmacy Quality Scheme and extra COVID-19 related costs”, the report published this week (January 30) added.

“The cash advances were made on the basis that payments would be recovered from pharmacies in 2021/22,” it said.

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

However, NHSE revealed in a list of cash losses for 2021/22 that it had failed to recover £15.7 million of these advance payments to pharmacies after many of them shut.

“A significant number of pharmacy contractors closed down between April 2020 and March 2022, making recovery of the advanced sum infeasible,” the report said.

 

Campaigns to write off loans

 

It comes after pharmacy minister Neil O’Brien indicated last month (January 24) that the DH may write off loans given to community pharmacies to ease cashflow pressures during the COVID-19 pandemic, saying the government is “working to…look closely at the issue”.

The DH first said it was “carefully considering” waiving community pharmacy’s obligation to repay the cash advances as early as November 2020.

Pharmacy bodies have actively campaigned for the loans to be written off.

The National Pharmacy Association drove a van to Parliament in a bid to get the government to cover £370 million, while the Association of Independent Multiple pharmacies called for an alleged NHS underspend of “billions” to be used to write off the COVID loans in May 2021.

Many had raised concerns that pharmacies in England might be forced to close because the Treasury was demanding repayment of emergency loans during COVID-19 that helped them stay open.

 

A pattern of closures

 

Meanwhile, three supermarket pharmacy chains have announced consolidation plans in the last month.

Lloydspharmacy came first, saying it would withdraw from its Sainsbury’s in-store branches “over the course of 2023”. Asda and Tesco followed, revealing proposals to close seven and eight pharmacies respectively.

Read more: Lloydspharmacy quits Sainsbury’s: What we do (and don't) know so far

And a C+D investigation last year revealed that community pharmacies across the UK also grappled with temporary pharmacy closures.

It comes as the Pharmaceutical Services Negotiating Committee CEO Janet Morrison this week (January 31) said the negotiator hopes an upcoming economic review of community pharmacy, due to kick off in March, will “prove” to the government that “pharmacies are no longer economically sustainable”.

Pharmacy leaders also wrote to Prime Minister Rishi Sunak urging him to invest in the sector in the face of “unprecedented closures”.

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