Interim funding arrangements that have caused monthly shortfalls of up to £7,000 for contractors are set to continue indefinitely as PSNC faces another stumbling block in its negotiations.

Contractors will continue to see the 45p reduction in average item value take its toll, after PSNC announced last week it was unlikely to reach a funding agreement with the Department of Health (DH) and the NHS Commissioning Board in the "immediate future".

There had been "no lack of will on either side" to secure a funding agreement based on the findings of the cost of service inquiry (COSI) published in 2011, PSNC said in a statement released on Thursday, following the introduction of the interim funding arrangements in October last year.

"The ongoing delays are extremely disappointing and will understandably cause frustration and concern for both the contractors on PSNC and all they represent" Sue Sharpe, PSNC	More on funding negotiations Interim funding agreement could force closures Lloydspharmacy chief defends PSNC negotiating       performance PSNC refuses to commit to contract review
	But because a new funding arrangement would apply for at least the next two years it was essential to ensure the agreement of the NHS Commissioning Board – which takes over responsibility for contracting national pharmacy services in April – as well as the DH, PSNC said. The NHS Commissioning Board was "only just taking shape with many relevant people not yet in post", it added.

PSNC chief executive Sue Sharpe gave no indication of how long negotiations might take, as she sought to reassure pharmacists that, although it was unlikely to be possible to reach an agreement before the end of March, "funding adjustments that result from the eventual outcome can be made at a later date".

"The ongoing delays are extremely disappointing and will understandably cause frustration and concern for both the contractors on PSNC and all they represent," said Ms Sharpe.

"However, the message from pharmacy has been clear: community pharmacy contractors need some certainty in future funding; a settlement at this point for 2012-13 alone would not be in the sector's best interests," she added.

Contractor and member of the PSNC negotiating team Bharat Patel said it was vital that community pharmacy stayed focused on a multi-year agreement.

"One of the main challenges for pharmacy businesses, and in particular independents, is planning, so having certainty in funding for a number of years would be extremely welcome," Mr Patel said.

Getting the next settlement right was "a matter of life and death for many independents", agreed contractor and NPA member Mike Hewitson. "We are under real pressure and need to see the light at the end of the tunnel," he said.

But, although PSNC's fight for a multi-year funding agreement was a "good call", the continuation of interim arrangements was a disincentive for contractors to invest in staff and services, said Pharmacy Voice chief executive Rob Darracott.

"The announcement of a delay means there is no immediate relief for pharmacies struggling with cash flow and tight margins," Mr Darracott said. It was "yet another reminder that the current contractual framework, and its continued erosion of margins, is unsustainable", he added.

In November 2012, Sue Sharpe told the LPC conference that progress had been made on contract negotiations, despite the lack of a 2012-13 funding agreement.

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