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PSNC: Cat M clawback and cuts make for 'difficult' year

Generic reimbursement prices will be £12m less for four months in a row

Contractors should start preparing for a £48 million reduction in category M payments across June to September, negotiator advises

A newly-announced category M clawback coupled with planned cuts to pharmacy funding will make this financial year “very difficult” for contractors, the Pharmaceutical Services Negotiating Committee (PSNC) has warned.

The Department of Health (DH) has decided to reduce category M payments by a total of £48 million between June and September (see more below), in response to data it believes shows contractors were paid more than the agreed sum for 2015-16, PSNC said today (May 13).

PSNC admitted that there was a “major over-delivery of margin" in 2015-16, but stressed that it had not agreed to the level of clawback. 

The chair of the negotiator's funding and contract subcommittee Peter Cattee “strongly advised” contractors to start preparing for the funding reductions now.

"Earnings from the first half of this financial year will be adversely affected by the [clawback], but will still be significantly above those expected for the second half," he said.

Government “unshaken” in plans to cut funding

The government had shown itself to be “unshaken” in its plans to slash £170m from the sector’s funding and plans to do this by reducing fees and allowances, the negotiator added.

PSNC is “very pessimistic” about the outcome of the government’s consultation on the cuts – due to close on May 24 – it said. The government has shown “little interest” in PSNC’s “constructive” cost-saving counter proposals, which include dispensing generic versions of branded drugs and a month-long campaign to raise awareness of medicines waste, it added.

Category M clawback – how much and when?

The DH announced today that it will reduce category M prices by £12m per month from June to September, to make up for what it views as excess margin that was paid to contractors over the agreed sum of £800m for 2015-16.

It believes that preliminary data it has analysed from the 2015-16 medicines margin survey is “robust enough” to justify the £48m clawback for the four-month period, it told PSNC in a letter.

The DH will review category M payments for October onwards in consultation with PSNC, once it has the final results from the survey. The DH's projections suggest that drug prices in October are "unlikely to see a significant recovery”, PSNC warned contractors.

The drug tariff will be amended to reflect the new prices and June 2016 prices will be available shortly on the NHS prescription services website, PSNC added.

Scottish contractors saw their funding increase this week. Find out by how much here.
 

How will the category M clawback affect your business?

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48 Comments

P M, Community pharmacist

cut locum wages now!

Amal England, Public Relations

Difficult year??!! PSNC please get your heads out of ------------! IT HAS BEEN A VERY VERY DIFFICULT DECADE!

Monu Aggarwal, Locum pharmacist

Leaving the EU and stopping EU funding may bring money back into pharmacy .. 2 Billion quid being spent of UK money------ VOTE LEAVE EU -------

Amal England, Public Relations

Leaving or staying in the EU has no bearing on the plight of pharmacy. Pharmacy [or rather the professionalism and income] is going down the toilet irrespective of the UK staying in the EU or not. It is the general belief that, in terms of money, the UK is getting more out of the EU then it is putting in. The real reason why 99% of those poeple who want the UK to leave the EU is becasue they are xenophobic- they don't want 'migrants' coming to the UK. The big names that are openly pro-Brexit, under the smile, they are racist. I don't care if we are in the EU or outside it, but migrants are very welcome, especially from areas where the UK is partly responsible for causing the chaos that led to the migration. As a pharmacist, I would happily treat the migrants.

Farm Assistant, Community pharmacist

My two main wishes are to get out of the EU and pharmacy. Here's an idea... let's send the PSNC to Brussells! Now just watch some richardhead down vote me.

S Morein, Pharmacy Area manager/ Operations Manager

Banks think that Pharmacy is a great bet to make an effective return. Yet contractors bleat about how they are all on their uppers whilst goodwill values remain at all time highs. Pleading poverty is laughable. The evidence that contractors are doing very nicely is more than overwhelming. Greed in supply of healthcare is not an attribute the DH will value. Excess purchase profits have to be returned.

Dave Downham, Manager

Quite right - banks have got such a strong reputation of making valued judgements about business and have such a fantastic insight into the running of a pharmacy and their remuneration current and future.

Altaf Vaiya,

Have you seen the interest rates? remember currently they are very low, if they increase the banks will be the first ones knocking at the pharmacy doors when cash flow gets tightened. Good wills are high, many people are looking at buying pharmacies to earn a wage not neccesarily a healthy profit. If you read all the reports about pharmacy, analyse the current market and see the forecasts, pharmacy as businesses are not in the stable position they were a 10 years ago etc...
'What does the global sum cut of £170 million mean to the average pharmacy in England? On average this will be a £20,000 reduction from turnover and gross profit, and if we do nothing this will result in a reduction of £20,000 from the bottom line. If you are an average pharmacy you're dispensing between 6,500 and 7,000 items per month and cash flow will be hit from November onwards to approximately £3,300 per month.'
This is first round of cut backs and I have not included the Category M claw back, if we lost £160 million this year, the government is not going to give that back next year, it is going to cut even further...Locum jobs are going to get tougher and the pressure on pharmacy staff is going to increase. It is a no win situation! 

Yuna Mason, Sales

I think we all have to fight the funding cuts. But I also think at the same time we have to break the hold that large corporate businesses have on the profession and put it back in the hands of pharmacists as the health professionals. Big businesses seem keen to keep the discussion going about funding, but much less keen to talk about poor working conditions highlighted by The Guardian. Pharmacist owned independents seem much less malevolent. 

Chris Locum, Locum pharmacist

I don't disagree but we will never have the response which the BMA has shown in the fight over junior doctors. We are splintered and any thought of you jumping off a building to start a revolution would not raise an eye brow. We have had a weak hand and also, we are now employees in the main in ever greater numbers. Governments have seen us as cost and not long term investnment in influencing health. The pharmacies will eventually disappear in sufficient numbers if cutbacks persist again and again, and the system of supply will change forever .Only the biggest would survive and many of us will be out of a job. The NPA signatures will have no effect because they are not the same as millitant picket lines or high profile battle. They see no fight in us - and they are 100% correct.

Milan Amin, Superintendent Pharmacist

The trouble with extortion is that it will eventually create a parasitic relationship, break the system, and the will of the individual.

We are near that end point as the 'profession' is killed off as being of low value and low worth by the people in power.

Freelance Chemist, Pre-reg Pharmacist

Amin Im not extorting anybody, they pay for what I am worth as a professional.  Are you seriously telling me Pharmacists should be working for £13 so your business can survive?  If your business is that bad why on earth remain open?

Milan Amin, Superintendent Pharmacist

The government Freelancer, the government.Not you.

Altaf Vaiya,

I wonder sometimes, why do so many people in these groups complain about contractors making money. In realistic terms, a person goes into business to make money. If contractors don't make money and their businesses struggle, it effects many people who work in that pharmacy. All the locums in this group who sit and attack businesses have the choice to become contractors, believe me it's not simple running a business and taking on responsibilities especially when cashflow is tight. Locums talking about £30 plus per hour remember it is all well and good demanding those rates but alot of contractors are not making that kind of money for themselves per hour. Have any of you guys worked out the operating cost per hour of the pharmacies you work at? Have you considered what it takes to pay locum fees? National Insurnace, Coperation TAX. 
Yes you may still say here is another contractor trying to defend businesses making money but that is simply not true, I know the hard work it takes to try and make a business thrive and sometimes simply survive. I am sure many contractors worry about paying their staff, their locums/managers, bank loans etc before they think about taking their own salaries. 
It is true some contractors could pay locums they employ more money, they could give their managers better support, but this is not true for all contractors. Pharmacy is going to see major cut backs in the next few years, without these pharmacies functioning many people, not only locums could find themselves without jobs, it's time we all stopped being selfish with our comments and we stay united in raising the profile of pharmacy.
Cut backs are not against just pharmacy businesses they are against everything community pharmacy does. We have a wealth of knowledge in comunity pharmacy that could benefit the NHS especailly when longevity of life is increasing and the costs of managing long term health conditions is increasing.
I support locums, pharmacy businesses and pre-registration students, I see the difficulties our profession is facing but I also see the successes we should be aiming for if we work with a mutual understanding and vision that community pharmacy needs to grow to help maintain skills of our workforce.

 

 

 

 

 

Amal England, Public Relations

Altaf, are you a contractor, paying a locum £30/hr?? If so, you are being robbed!! Fire them and re-negotiate for upto a maximum of £21/hr.

Amal England, Public Relations

Altaf, are you a contractor, paying a locum £30/hr?? If so, you are being robbed!! Fire them and re-negotiate for upto a maximum of £21/hr.

Freelance Chemist, Pre-reg Pharmacist

Altaf are you one of these contracts that pays your locums £13 ph? BTW you do not pay any tax or NI for locums so please get your facts right. I did not go to university to work for an hourly rate of that of an unskilled worker! I suggest businesses start to treat their pharmacists with respect. Without pharmacits/locums you wouldn’t be able to operate your businesses, please remember this. Many good pharmacists are leaving the profession (community pharmacy) in droves to either retrain or move to other sectors (I myself am doing my IP course and will by sept 2016 be starting my new job at 60K for 37.5 hours, no longer working in a sweat shop ;-))

Shaun Steren, Pharmaceutical Adviser

 

I can distil your post down to 'a mutual understanding that monopoly profits must be maintained' . As an employee\locum I have accepted that my pay has come down about 25% in real terms since 2006 and will continue to fall with the massive oversupply of pharmacists. I accept that unemployment will rise with the massive oversupply of pharmacists and the use of new technology. I accept that the workload has increased by 50% or more in that same time and will continue to rise. So when you dress up your monopoly propaganda as working together for mutual benefit, I will say to you - don't p*ss on me and tell me it's raining. There is a battle ahead and I would encourage all locums/employees to join forces with the likes of The Guardian and the PDA and fight those who want socialised risk with privatised profit and protected ownership with a free-for-all employee/locum jobs market. My fellow locums/employees, Timeo Danaos et dona ferentes! 

 

 

Yuna Mason, Sales

It was in The Guardian recently that the NPA had got a million signatures on its petition. Did the government say "Wow ok then, you can have your full debate in parliament!" No. But if The Guardian had mentioned the official petition, we'd be over 100,000 now.  https://petition.parliament.uk/petitions/116943 - 6 weeks left to go!

M Elnemy, Non healthcare professional

Yawwwwn........ 

What do you want ? Immunity from cuts ?  Boring 

 

thepharmacist Forever!, Pharmacist Director

Well the March 2016 Ppa schedule is not out yet and won't be seen by contractors for another couple of weeks, but they have used preliminary data, what happens if once they have seen all the data they realise they have it wrong?....... Will the pharmacies be repaid (not a chance I would have thought!)

S Morein, Pharmacy Area manager/ Operations Manager

Underpayments have always been reimbursed by the DH. 

thepharmacist Forever!, Pharmacist Director

I wish this was the case, when contractors have made an error on the endorsement and realise after the scripts are sent to the Ppa, or if they are claimed for eps2 prescriptions, then they will not let you rectify and the pharmacy will be underpaid, but if you are overpaid by their system and it gets picked on their internal checks they will collect the money back from the contractor!

Freelance Chemist, Pre-reg Pharmacist

I have it on good authority that more cuts are coming!  The current model of pharmacy in the UK is NOT fit for purpose. The DOH have had enough of trying to encourage change so instead they are forcing change now upon contractors.  This will ultimately be good for the profession

Dave Downham, Manager

Good look with negotiating your locum rates in the future.

M Elnemy, Non healthcare professional

I'm getting. £35 hr plus this Saturday at tesco That should cover any fake cuts I may have to suffer in my pharmacy 

Freelance Chemist, Pre-reg Pharmacist

it goes to show you can earn £30+ ph if you negotiate and dont use Team locum.  These agencies keep the rates low so they can get more repeat business form the like of boots and lloyds    

M Elnemy, Non healthcare professional

Agree 100%. Agencies don't give a damn for the locum. They sit in their fancy offices whilst the Locum runs around like a headless chicken 

M Elnemy, Non healthcare professional

Davy boy you sad pathetic peewee... Is that a threat ....

Dave Downham, Manager

Merely an observation, you name-calling sad, pathetic pseudonymn using stirrer.

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