Category M clawback increases four-fold
Business Some pharmacy businesses could face cashflow problems this summer as category M clawbacks increase four-fold from the previous quarter
Some pharmacy businesses could face cashflow problems this summer as category M clawbacks increase four-fold from the previous quarter, a financial expert has warned.
The category M tariff for the third quarter of 2012 will see £9,291 taken out of the average pharmacy's generics purchase profits, according to Actavis analysts.
This is more than four times last quarter's clawback of £2,250 and the equivalent of £3,097 taken from the average pharmacy each month.
The clawback "could not come at a worse time" Umesh Modi, Silver Levene |
More on category M |
PSNC stressed that this quarter's category M changes were in line with regular fluctuations seen in the tariff, but Umesh Modi, a partner at accountancy firm Silver Levene, said the clawback "could not come at a worse time". "For many pharmacies, the summer months tend to be quiet for business generally and cashflow is poor," he told C+D. "On top of that, many have their second instalment of personal tax liability to pay on July 1, so my advice to contractors is that they should monitor their cashflow carefully by keeping an eye on expenses." |
Mr Modi also suggested that contractors should "talk to their suppliers, banks and HMRC as soon as possible to extend their payment terms or overdraft facilities" to overcome any short-term difficulties.
Independent Pharmacy Federation chief executive Claire Ward agreed some contractors could have financial difficults in the coming months. "We've got category M alongside massive changes in the drug tariff, many of which are quite complicated. Category M combined with the methadone changes will be a huge hit for some pharmacies and independents are less well equipped to deal with these," she said. Find out how your pharmacy and top lines will be affected by this quarter's category M tariff with the Category M Barometer.
How will this clawback affect your business? Comment below or email us at [email protected] You can also find C+D on Twitter, LinkedIn and Facebook |