It marks the end of a year-long category M clawback that saw contractors lose an average of 17-18p-per-item since August 2017. This financial pressure has been heightened this month due to an additional 17p-per-item clawback.

The upcoming increase in reimbursement prices is “a result of negotiations with PSNC in which we raised concerns about the impact of price reductions on contractors’ cashflow”, the negotiator said.

The Department of Health and Social Care (DH) had otherwise been planning to continue the clawback “because the latest margins survey results from 2016-17 suggest there was over-delivery of margin in that financial year, with some excess yet to be recovered”.

“However, underlying category M prices will continue to be based on manufacturers’ data, so prices will still reflect the lower purchase prices that led to the additional reduction in prices seen in the July tariff.”

PSNC director of pharmacy funding Mike Dent said: “The decision to cease margin recovery in the short-term in light of PSNC’s representations about contractors’ cashflow is very positive and reflective of the collaborative relationship that we are trying to rebuild with the DH.”

“PSNC will be working, through the negotiations on funding and in discussions with the DH, to get the best possible deal for contractors and to ensure that any future mechanisms to correct margin delivery are as manageable as possible in terms of cashflow.”