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Pharmacies to pay back £370m from October but some COVID costs covered

Simon Dukes: “There simply was no further offer to be squeezed out”
Simon Dukes: “There simply was no further offer to be squeezed out”

PSNC has accepted a revised and “much improved” offer from the UK government on pharmacy's COVID-19 costs, but the sector will have to pay back the £370m advance funding.

The Treasury “has insisted” that the sector pays back the £370 million advance payment it received last year to help pharmacies cope with cashflow pressures during the pandemic, the Pharmaceutical Services Negotiating Committee (PSNC) has said this afternoon (June 28).

The Department of Health and Social Care (DH) plans to take back repayments in six equal monthly sums, starting from October, PSNC explained.

However, the details of how this will work are subject to “further negotiation” with the DH after it considers with PSNC the “likely quantum of the claims payment and cashflow”. However, PSNC said that contractors will be able to make claims for COVID-19 related costs they incurred between March 2020 and March 2021.

From July 5 and until August 15, pharmacies can start claiming for four different categories via the NHS Business Services Authority (NHS BSA) and will receive payment for their COVID-19 costs on October 1.

What can contractors claim for?

The government has also agreed to remove a cap of £120m it had initially imposed on the amount it would pay for submitted claims, PSNC announced.

Contractors based in England will be able to recoup costs by making claims for:

  • Additional staff costs due to COVID-19
  • Costs incurred to make premises COVID-19 secure
  • IT and communication costs to support home working and virtual patient contact
  • Notified closures for infection control purposes, for a maximum of 14 days.

Contractors will need to specify their costs when submitting their claims to NHS BSA and share relevant evidence.

“Contractors will also need to confirm that documentation to evidence their claims is available should the NHS BSA ask to see it,” PSNC added.

PSNC: “This deal is the best one we could get”

Commenting on today’s announcement, PSNC CEO Simon Dukes said that while the deal “is not quite what PSNC had asked for” – as the negotiator wanted to see the £370m advance payment written off completely – it is “the best one we could get, giving every contractor a fair chance at having their costs covered”.

Mr Dukes also found it “regrettable” that “at no point in our difficult negotiations have the NHS stepped in to support us”.

“Pharmacy should rightly feel aggrieved at this ongoing battle to prove itself as a critical part of the NHS family,” he said.

However, PSNC’s decision to accept the offer “reflects the fact that this was the best offer available: given the lines drawn by the Treasury, there simply was no further offer to be squeezed out of the government”, Mr Dukes added.

PSNC funding and contract subcommittee chair Peter Cattee said that the negotiator had previously made it clear that it would not be able to settle negotiations on the third year of the five-year community pharmacy funding deal until COVID costs were resolved.

“We are pleased that this first step has now been done. Discussions on the annual review and PSNC’s bid for an uplift to pharmacy funding are also still not resolved and could take some time, and we are very cognisant of the cashflow challenges that pharmacies will face in the second half of this year, not only from the advance payment repayments, but also wider factors such as uncertainty over margin, PEPS and the pandemic.

“This will factor into our year three negotiations and into discussions with DH on repayments of the advance payments,” Mr Cattee said.

Association of Independent Multiple Pharmacies (AIMp) CEO Leyla Hannbeck told C+D today that while the organisation is “disappointed it has taken so long” to reach a deal, it is “grateful that the government has recognised the resilience and commitment our members showed in staying open and available for patients in their local communities while all other doors around them closed”.

Allowing pharmacies to submit claims for a 13-month period instead of the initial proposed three months “will make a big difference”, Dr Hannbeck said.

“Throughout this crisis, community pharmacies have remained open, fulfilling healthcare needs. During that time, they’ve run up enormous bills as a result, and it’s only right that is now recognised and they’re properly reimbursed,” she added.

Timeline: COVID costs and advance payments

The DH paid community pharmacies in England a total of £370m in advance funding between March and June 2020 to recognise their cashflow pressures during the COVID-19 pandemic.

Ahead of this year's Spring budget, PSNC had asked the chancellor Rishi Sunak to intervene in the COVID-19 funding negotiations to ensure pharmacies will not be required to repay £370m.

On March 11, pharmacy minister Jo Churchill said the DH expected to reimburse pharmacies for COVID-19 costs by reducing the £370m the sector must pay back.

Negotiations on the 2021/22 pharmacy funding contract in England began in April, and PSNC said at the time that no agreement could be reached without clarity on COVID costs.

The National Pharmacy Association drove a van from Boris Johnson’s London constituency to Westminster last month, campaigning for the government to write off the sector’s £370m advance payment.

24 Comments
Question: 
What do you make of this announcement?

Karl Legg, Superintendent Pharmacist

So, I have just looked at the Drug Tariff Determination,  to try to look at the possible outcome. Turns out the overall increased staff bill already exceeds the advance payment my pharmacy received. This can all be verified by my payroll company and HMRC! How ironic it would be if that by making us look closer at the figures our claim as a profession will be increased. Still no more valued by the government, just our patients.

Stephen Kane, Community pharmacist

Association of Independent Multiple Pharmacies (AIMp) CEO Leyla Hannbeck told C+D today that while the organisation is “disappointed it has taken so long” to reach a deal, it is “grateful that the government has recognised the resilience and commitment our members showed in staying open and available for patients in their local communities while all other doors around them closed”. 

No Leyla, the Government is allowing us to reclaim our legitimately incurred additional costs as originally promised. We have nothing to feel grateful for.

Stephen Kane, Community pharmacist

The initial cap on this payment was £120M (although I remember Boris and Matt Hancock instructing us to spend whatever was necessary). The total advance payment was £370M. This implies to me that DOH are anticipating we will claim no more than 30% of our individual loan amount. From my best guess figures this is nowhere near enough, about 50% is probably closer.  

At the begining of the pandemic we were told to document all additional costs, but that was 15 months ago, and the first three months were a tidal wave of work against unprecendented staff absence through sickness and isolating. Still we kept going. Only now are we being asked to produce these historic figures, at a time when we have numerous other deadlines to meet, preparation and training for flu service, GPCPCS roll out and also holiday commitments and, of course, an infection rate rising which means more staff isolation absence.  

It looks like we have a deadline of 6 weeks to produce these figures, although as yet we have no details of the fine print. Yet another piece of additional bureaucracy, which, since it occurs after March 2021 is not chargeable under this scheme. Presumably DOH will take a leisurely look at the figures and then launch fraud investigations against any contractor who has breached the 30% rule.  

If only we had been told all this in March 2020.  

 

Reeyah H, Community pharmacist

It may not be as bad as we think. Pharmacies have had very real Covid costs - once the criteria is revealed, claim back every penny possible! 

Ebers Papyrus, Pharmaceutical Adviser

The devil is in the detail, let's see what the terms are.........

sunil maini, Community pharmacist

spineless cretins.Again.

Mark Boland, Pharmaceutical Adviser

because you would walk into the room and demand a kings ransom? You have no leverage - what are you going to threaten? 

Kav Singh, Community pharmacist

If thats not the biggest f*** you from DOH I dont know what is. Bring back Sue Sharpe. At least she fought to the bitter end. Now we just get told whats going to happen, Dukes "we are negotiating". From where Im sitting there is no negotiating its a dictatorship.

Dave Downham, Manager

Bring back sue blunt? Seriously?

Meera Sharma, Pharmacy owner/ Proprietor

No mention of the 19p per item margin reduction in July drug tariff which is going to hit hard. 

horace harkness, Dispenser Manager/ Dispensing Assistant

what is even the point of PSNC. we might as well just take whatever scraps the government throws at us. 

Richard MacLeavy, Dispenser Manager/ Dispensing Assistant

We do! PSNC is there to dress it up for us and make it seem like a good deal. 

An Anonymous Contractor Independent Pharmacy, Pharmacy owner/ Proprietor

Initial reaction > This is not acceptable. It’s a terrible ‘deal’ (not a ‘deal’ – it’s a ‘surrender’). There’s no justification PSNC can use to make it seem acceptable – it isn’t. It’s a kick in the teeth from PSNC, NHS & Government. We are completely gutted.

Pharmacy owners like ourselves (and our staff) have been working every day since Feb 2020, putting in hundreds of extra unpaid hours, supporting & backstopping all the other healthcare services (A&E, GPs, dentists, mental health etc) in support of our local communities, who for the most part are incredibly grateful – but at the same time we’ve faced daily abuse from some of those healthcare colleagues and from customers. We haven’t had a single day off, let alone a break or a holiday. We barely had the funds to pay for locum cover even before the pandemic started, & the madness of the last 18 months has just exacerbated cash flow difficulties (reduced OTC sales, shortages, price increases, more expensive bureaucracy etc).

The element for ‘IT and communication costs to support home working and virtual patient contact’ is a joke. Unlike GPs who closed their doors (& many are still closed in the area around our pharmacy as well as in our hometown) & also unlike dentists who shut shop – pharmacies have remained open & available for face-to-face consultations & for the most part haven’t resorted to a ‘virtual’ service.

Presumably now, we price up all the extra hours worked, and we also work out charges for all the consultations we’ve carried out so we can make a claim for our costs. We shall include the extra hours, extra services provided, extra consultations, extra deliveries & all the extra ‘miles’ we’ve all gone to look after people we care about – at great cost to our own health, mental health & family lives.

Otherwise, we may as well give up now if this is the best PSNC can do for us. Not acceptable.

anti-depressed Pharmacist, Manager

Well done, keep going “above and beyond” and keep getting treated like a doormat.

Mark Boland, Pharmaceutical Adviser

"Not acceptable"

However, you continue to accept it, therefore making it acceptable. It is acceptable to you because the alternative would be genuinely unacceptable (by definition).

The government understands your predicament and so squeezes accordingly. The moment the contract was accepted in 2005 and supported by the 'clinical visionaries' within the profession, your fate was sealed. 

I don't doubt your hard work for one moment, but you are playing with a loaded deck of cards and expecting fairness.

 

 

Axed Locum, Locum pharmacist

If it is that bad, give up and sell up, while the premiums are holding up!, but don't join the locum pool, because  you will be expected to do more than what you are already doing for a fee of £19.00 ph, which will soon drop to £18.00 ph.... including expenses.

 

An Anonymous Contractor Independent Pharmacy, Pharmacy owner/ Proprietor

Great idea! – so long as you have the headroom in the sale price to cover your investment and outstanding loan – and are happy to wave goodbye to your possible pension plans. Not to mention leaving colleagues, customers & their families who have become good friends over the years. Big decision...

NB We are a small single independent and really appreciate the hard work locums put in. Our locum rate is a minimum £25 per hour plus travelling expenses.

Mark Boland, Pharmaceutical Adviser

"We are a small single independent and really appreciate the hard work locums put in. Our locum rate is a minimum £25 per hour plus travelling expenses"

Then you are an extreme outlier in a market that pushes for sub £20, no mileage and offers appalling work conditions.

Axed Locum, Locum pharmacist

Quite frankly, your complaint is not justified. The independents fared batter than the multiples, and also all contractors benefitted from rates relief, LA grants, extra payments for April and May bank holidays cover, Delivery costs for those isolating, vunerable, and there was also an increase in OTC business. You really can't complain. In fact business was so good, business transfer activity increased, as reported by the brokers. Premiums have held up for this tax payer funded business, whilst a lot of other without this support have folded.

Since 2005, under the new contract, there has been an annual increase in the global sum, and the fee generating locums /pharmacists at the coal face have seen their pay go down in real terms.

The contractors for the past decade have been pleading hardship, and forecasting mass closures.This never happened, because it was a disingeneous plea, and in reality business has never been bad, but so good, that they have been fetching enormous premimums.

One can only carry forward losses for a few years, until either the owner throws the towel in, or the bank forecloses, leading to fire sales!!

I havent seen any yet, unless i am walking blind!!

The disngenous rhetoric must come to an end, nothing personal.

Respect your fellow professionals, and don't exploit them, and you will see less of such blogs.

 

 

 

Caring Pharmacist, Community pharmacist

I tend to agree with these comments. Any idiot would sell the business if they were making a loss in real terms and walk away with whatever they can get for it.

But is it the case?

Chemical Mistry, Information Technology

Accountants modiplus who is on this website just sold a pharmacy £150,000 above the asking price!!!!!!

N O, Pharmaceutical Adviser

Basically we as a sector not only lost many professionals to this pandemic but also lost heavily in terms of reimbursements. Sad day for community pharmacy. I can only see chains being heavily advantaged over smaller independents who will now have to spend extra weekends searching for evidence.

Chemical Mistry, Information Technology

PSNC caved in, maybe pharmacy should remember this winter when the next wave and lockdown, or probably be the health martyrs again, can't see them getting a ovation at Wimbledon 

Mark Boland, Pharmaceutical Adviser

PSNC has very little leverage. It negotiates on behalf of a sector which the government doesnt want to fund and which contains thousands of people who are willing to do things for free.

Furthermore, closing pharmacies isnt a vote loser, the public couldnt care less.

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