“Based on our analysis of the Category M price list for January 2025, CPE estimates there will be an overall reduction in reimbursement of approximately -£34m per quarter”, the negotiator last week (December 23) revealed.
CPE said that the reimbursement drop is the result of a “combination” of tariff adjustments.
These include a -£17.9m margin adjustment “informed by the latest results from the margin survey”, “an adjustment to reflect movements in the underlying market” and “entry of new generic medicines into Category M”, it added.
Read more: UPDATED: Cat M clawback: Pharmacies hit with £9m monthly price reduction
“Results from the margin survey of independent community pharmacies up to Q1 2024/25 indicated that there remained an over-delivery of margin and therefore in the normal course of business a reduction in the drug tariff would be expected,” CPE said.
But the negotiator revealed that it had “argued for no reduction in the January drug tariff” in discussions with the Department of Health and Social Care (DH).
“Inappropriate”
CPE said that it told the government that “the unsustainable financial pressures already being experienced by English pharmacy businesses” would make “further reductions impossible to absorb”.
“We argued that it was inappropriate to enact material changes to pharmacy contractor funding while contract negotiations for 2024/25 remain unresolved,” it added.
“We also remain concerned about the significant number of products being reimbursed at economically unviable prices - the NHS focus on low prices over stability of supply continues to drive disruptions in availability…[and] further reductions in reimbursement prices will only exacerbate these issues,” CPE said.
Read more: Streeting and Kinnock say it will be a ‘New Year’ start for pharmacy contract negotiations
“The matter was ultimately referred to ministers, who determined that a margin adjustment would be applied to the January drug tariff,” it added.
Meanwhile National Pharmacy Association (NPA) chief executive Paul Rees told C+D that the news “is the latest reminder of the unjust structure of the current contractual framework which makes it almost impossible for pharmacies to plan for the future or invest in service improvements”.
“This move is especially painful for independents, who can’t spread financial risk across a large number of contracts,” he added.
Contract coming?
In July, the negotiator announced that mistakes in government calculations of Category M reimbursement would result in clawbacks to correct an overpayment of around £9m per month.
At the time, CPE said that “downward adjustments are unaffordable and will further put the viability of the sector at risk” as it voiced its “clear opposition” to the measure.
And Company Chemists' Association (CCA) chief executive Malcolm Harrison told C+D that “further clawbacks will only serve to place additional strain on pharmacies’ cashflow”.
Read more: Pharmacy ‘may not survive winter’ as pharmacist MP urges govt to avoid ‘past 14 years’ of mistakes
Meanwhile, pharmacy minister Stephen Kinnock last month said that contract funding negotiations will begin “shortly in the new year”.
Speaking at a health and social care committee (HSCC) public evidence session on the government’s 10 Year Health Plan, health secretary Wes Streeting said his “number one focus” for community pharmacy is “stabilising the system” as he was questioned on his approach to resolving numerous healthcare issues.
