Question to the Department of Health and Social Care:

To ask the Secretary of State for Health and Social Care, what comparative assessment his Department has made of (a) Drug Tariff reimbursement prices and (b) prices paid by community pharmacies to obtain medicines affected by supply disruption.

With regards to the Drug Tariff reimbursement prices, the community pharmacy reimbursement arrangements do not guarantee that every contractor will be paid the cost of every item; however, concessionary prices mitigate losses for individual products, while medicine margin arrangements ensure contractors are paid more than their overall purchasing costs.

Medicine prices can increase for several reasons, for example, suppliers rapidly increasing their prices due to supply constraints or manufacturing issues. Where the market price of a medicine suddenly increases, concessionary prices can be granted in that month, increasing the reimbursement price above the published Drug Tariff reimbursement price. This arrangement helps to ensure that pharmacy contractors can continue to obtain sufficient stock for their patients.

Medicine margin is the difference between the reimbursement price and the price the pharmacy was charged by the supplier. As part of the Community Pharmacy Contractual Framework 2026/27, pharmacies can retain £1.1 billion as medicine margin to contribute to their payment for pharmaceutical service provision. The Department assesses the medicine margin retained by pharmacies across purchases through a quarterly survey. These arrangements ensure that pharmacies are paid above what it cost them to purchase medicines and the allowed amount of medicine margin to contribute to their payment for pharmaceutical service provision.

As set out in A guide to the systems and processes for managing medicines supply issues in England, we have a range of established tools to manage disruption and support pharmacy contractors when issues arise. These include working with suppliers to expedite deliveries, issuing timely guidance to pharmacy contractors, supporting access to alternative strengths or formulations, and sourcing unlicensed imports where appropriate. The guide is available at the following link:

https://www.england.nhs.uk/long-read/a-guide-to-the-systems-and-processes-for-managing-medicines-supply-issues-in-england/