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Pharmacy minister agrees 'unprecedented' 15p rise in advance payments

PSNC is "grateful" Steve Brine has responded to its request for "urgent measures"
PSNC is "grateful" Steve Brine has responded to its request for "urgent measures"

The pharmacy minister has agreed to an “unprecedented” 15p-per-item increase in advance payments next month, PSNC has announced.

Responding to the “extraordinary cashflow challenges” highlighted to the government by the negotiator, Steve Brine has agreed to the “urgent measure” for November alone, the Pharmaceutical Services Negotiating Committee said this afternoon (October 23).

“The increase has been confirmed for one month only, and full and final payment for services provided in September will be reconciled as usual at the end of November,” PSNC said.

“This means contractors will not receive any additional funding overall, but the impact of the expected reduction, to be seen in the November 1 payment – following drug tariff price reductions put in place from August – will be smoothed out.”

PSNC “grateful”

PSNC chief executive Sue Sharpe said: "The pharmacy minister has responded to PSNC's request for urgent measures to offer contractors some relief, and this unprecedented action will help many pharmacies to manage the cashflow crisis over the next few weeks.

“We are grateful for this positive response.”

However, PSNC “remains concerned that there will be pharmacies for which this is too little, and that it may be too late”, she stressed.

Ms Sharpe added that Mr Brine’s latest decision gives PSNC “hope” that it “will be able to restore the constructive relationships that underpinned” its work negotiating pharmacy funding with the government “before 2015”.

The payment increase explained

Why is the increase being applied?

At the beginning of October, a pharmacy would have received an advance payment for the dispensing month of August. This was an estimated payment, taking into account the pharmacy’s number of declared items for August, and the pharmacy’s average item value from the dispensing month of July.

Because of the reductions in category M prices in that month, the advance for August is likely to have overstated the value of August’s prescriptions. Subsequently in the November 1 payment, the pharmacy will receive the balancing payment for August, and the advance payment will be recovered. This means that the November 1 payment is the point at which the impact on contractors will be most significant as the balance for August will be lower than the recovery of the advance.

How will it help?

The aim of the increase to the November 1 advance payment – paid for declared items for September – is to smooth out the effect of the expected reduction in value of payments, and reduce the impact on cashflow.

Will the cashflow issues continue for the long-term?

The pharmacy funding cuts imposed by the government will undoubtedly mean that contractors will face ongoing pressure on their finances. PSNC does not know whether further funding cuts are planned beyond the 2017-18 financial year. The reduction in reimbursement prices made from August had a more significant impact than expected because of the increase in generic prices that followed shortly afterwards.

The DH intends that reimbursement prices should catch up as they – in the main – reflect the market, but until this happens the cashflow issues will remain severe.

Source: PSNC website

7 Comments
Question: 
Will this 15p payment rise help your pharmacy cope?

Simon MEDLEY, Community pharmacist

had my overdraft in place already, as i'm going to need it this month, as an extra £767.25 does little help a fp34 that shows a net payment  that eneded up £8k less than the '' total of drug and appliance costs plus fees''.  Have to pay corp tax  ( as i'm not a large multiple) in december based on those  ''excess profits from margin  discounts'' which i'm now giving back as well. Suppose it will all come out in the wash eventually if we don't all drown first

 

 

Andrew Nicholson, Community pharmacist

Is this why the nhsbsa website hasn't published the fp34 data yet?

Andrew Nicholson, Community pharmacist

Big deal!So they give you 15p an item loan!It still comes back off the bottom line!At least its 0% interest!It does not solve the problem.

NIRMAL BAJARIA, Superintendent Pharmacist

"PITTANCE"

Barry Pharmacist, Community pharmacist

Just wondering what the best metaphor for this is? Like someone turning up the car radio to drown out the screams from the passengers as the car heads towards a brick wall? Or throwing a drowning man a pair of speedos? 

Suketu Patel, Community pharmacist

What a waste of time and headline. As above the additional financial support is zilch, nada...... About the same as the current power of the PSNC!

 

Dave Downham, Manager

This is merely a temporary nudge in the cashflow. No impact at all in bottom line and just a small delay. I'd like to say it's better than nothing but in the long term, that''s just what it is - nothing. Thanks PSNC. (Does this get Steve an invite to Sue's leaving do?)

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