Pharmacists in England are suffering their biggest drop in revenue for four years as a result of October's category M clawbacks, with some losing more than £100,000 from their annual revenue, contractors and pharmacy experts have warned.

Umesh Modi, partner at accountancy firm Silver Levene, argued that pharmacists were struggling to cope with an increase in dispensing volumes and their NHS practice payments "dropping like a stone" since clawbacks of £72.5 million per quarter were introduced in October.

One of Mr Modi's clients saw their estimated NHS income fall by £124,000 since December, while others were "surprised and disillusioned" by the clawbacks, he told C+D.

A combination of £72.5m category M clawbacks, methadone pricing drops and a fall in practice payments has hit some contractors with a revenue drop of £100,000	More business news Ability to change should be at heart of pharmacy       business, Numark says Forget NHS budgets and source other income, Numark       conference told Two pharmacy companies go into administration MORE NEWS
	It was the worst financial situation for four years and many pharmacists were turning to Citi's government-backed loan scheme as a lifeline, Mr Modi said. The scheme offers contractors their estimated payments a week after prescriptions have been submitted to the NHS Business Service Authority rather than waiting for the NHS to pay out.

Contractor Martin Bennett of Wicker Pharmacy, Sheffield, said his pharmacy was "severely hit" by the fall in methadone prices as well as the category M clawbacks. Item fees for oral liquid methadone fell from £4.05 to £2.50 per prescription in April and resulted in an estimated drop in annual gross profit margins of about £60,000 for his business, he told C+D.

Mr Bennett agreed that the Citi loan scheme, which has been available from April for pharmacists who signed up in February, would enable contractors to continue working "without having to go back to the bank".

Buying group PharmaPlus managing director Hiten Patel said the clawbacks, combined with uncertainty around getting enhanced services commissioned by local authorities, meant pharmacists were "fighting on several fronts".

Despite an 8p increase in practice payments introduced in April, Mr Patel reported "a visible decrease" in the payments he received from the NHS in the past three months compared to what contractors were used to.

In September 2012, PSNC announced interim funding arrangements for England's contractors for 2012-13, including a drop in practice payments of 15p per item and category M clawbacks of £72.5 million per quarter, taking effect from October.

In April, practice payments rose by 8p to a total of 66.2p per item in an effort to assist businesses. A positive reimbursement of 0.8 per cent in April's category M tariff also gave an estimated boost of £310 to the average pharmacist's purchase profit until June.