Question to the Department of Health and Social Care:

To ask the Secretary of State for Health and Social Care, what steps he is taking to prevent community pharmacies from operating at a financial loss when dispensing medicines for which the purchase price exceeds the NHS drug tariff reimbursement rate.

We have now concluded the consultation on funding for 2024/25 and 2025/26, and have agreed with Community Pharmacy England to increase the community pharmacy contractual framework to £3.073 billion. This deal represents the largest uplift in funding of any part of the National Health Service, over 19% across 2024/25 and 2025/26.

There are two arrangements in place to avoid pharmacy contractors dispensing at a loss and to ensure that overall, they are paid enough as part of the Community Pharmacy Contractual Framework (CPCF) funding. These are the medicine margin and the concessionary price arrangements.

The community pharmacy reimbursement arrangements include an amount of medicines margin, the difference between the reimbursement price and the price the pharmacy was charged by the supplier, that pharmacies are allowed to retain as part of the CPCF funding. The Department assesses the medicine margin through a quarterly medicine margin survey, which ensures that overall, pharmacies are paid more than what it cost them to purchase medicines.

The concessionary prices are granted to ensure that pharmacy contractors are fairly reimbursed for any prescriptions dispensed during that given month, where they may suddenly face challenges in obtaining stock at the Drug Tariff reimbursement price. In addition, there is a ‘retrospective top-up payment for concessionary prices’, which provides an additional payment to contractors when the margin survey indicates that despite a concessionary price, there was an under payment.