A Labour MP has defended the NHS’s decision to claw back millions from pharmacies over the next year, saying the downward adjustment is “within the agreed 2025/26 Community Pharmacy Contractual Framework (CPCF) settlement”.
Lord Scriven, a Liberal Democrat and member of the House of Lords, asked the government “whether they considered the findings of NHS England’s economic analysis” - which found that the community pharmacy sector is underfunded by over £2bn a year - when “deciding to clawback a further £16.8m per quarter from community pharmacies through adjustments to drug tariff price lists”.
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It follows the NHS Business Services Authority (NHSBSA) announcing in December that there was a £158m “overdelivery” of medicine margin at the end of June - and that the subsequent adjustment applied to January 2026 is a “reduction of £16.8m per quarter”.
The NHSE analysis, published last March, estimated that the cost of running pharmacies was “in the range £4.397-5.730 billion” in the 12 months to March 31 2024.
“Agreed with CPE”
Answering on behalf of the Department for Health and Social Care (DH) on January 20, Labour peer Baroness Merron said that £900m of the pharmacy funding agreed for 2025/26 “is the amount pharmacy contractors are allowed to retain as medicine margin, the difference between the reimbursement price and the purchase price paid by the pharmacy contractor”.
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She added that the DH and Community Pharmacy England (CPE) assess the medicines margin retained by community pharmacies “in totality, through a quarterly margin survey”.
“If too much medicine margin is being delivered, then downwards adjustments, or clawbacks, are made to bring this in line with the allowed medicine margin as agreed under the CPCF settlement,” she said.
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Baroness Merron noted that NHSE’s economic analysis “is considered as part of the wider decision on the CPCF settlement, which was agreed with CPE”.
“The medicine margin adjustment made each quarter, including the downward adjustment of £16.8 million per quarter made in January 2026, is operating within the agreed 2025/26 CPCF settlement,” she said.
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It comes as the National Pharmacy Association (NPA) and the Independent Pharmacy Association (IPA) have called on the government to begin negotiations for the 2026/27 contract “as soon as possible”.
Negotiations were expected to commence last autumn, but CPE last week told C+D that it was still awaiting the mandate from the government and the NHS to begin - and now expects negotiations to start early in 2026.
