Contractor Announcement: community pharmacy funding settlement and national flu vaccination service for 2015/16

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Contractor Announcement: community pharmacy funding settlement and national flu vaccination service for 2015/16

July 20, 2015

PSNC has reached agreement with the NHS on a community pharmacy funding settlement worth £2.8 billion for the 2015/16 financial year. The agreement sees the introduction of a new Advanced Service – a flu vaccination service – along with some changes to the Community Pharmacy Contractual Framework (CPCF).

The flu vaccination service will launch in September 2015 and from that point community pharmacies will be able to offer NHS flu vaccinations to adult patients aged 18 and over at the time of vaccination, who are defined as at risk in the Annual Flu letter (which includes patients aged 65 years old and over).

Fees for flu vaccinations will come from national flu budgets, i.e. in addition to and outside of the £2.8bn and with the total delivered dependent on uptake of the service. Pharmacy contractors will receive £9.14 per administered dose of vaccination as well as reimbursement of vaccine costs. The fee comprises remuneration of £7.64 per administered dose and an additional fee of £1.50 per vaccination to recognise costs that will be incurred in order to provide the service (e.g. training and clinical waste disposal costs).

More details on the flu vaccination service are available in the briefing below and a service specification and guidance for flu vaccinations are being developed and will be published in due course.

In addition to this new service PSNC and the NHS have agreed to establish a joint working group to review the costs of the Electronic Prescription Service to inform future negotiations, and to a number of changes to the CPCF.

The changes will mean that any patients claiming prescription charge exemption without presenting any evidence of entitlement must be informed about the exemptions checks and action on inappropriate claims that the NHS takes.

As in 2014/15, pharmacies will also need to participate in a national audit, the topic of which is yet to be agreed.

PSNC and NHS Employers have agreed to work together to produce business cases for other community pharmacy services for consideration in the 2016/17 negotiations.

And PSNC will work with the NHS to take forward an agreement in principle on the publication of pharmacy earnings from the NHS, in line with the requirements on other health professions and service providers.

As last year, £2bn of the agreed funding will be delivered through fees and allowances with £800 million to be delivered through agreed purchase margins.

It is not yet clear what changes will need to be made to the Drug Tariff in October 2015 to ensure the correct delivery of the agreed fees, allowances and purchase margin. As always any adjustments will depend on the outcomes of the Margins Survey and PSNC will work to ensure full and fair delivery of the agreed funding to contractors. Contractors will be informed of any changes to Category M prices and/or Practice Payments in due course.

The New Medicine Service (NMS) and Medicines Use Reviews (MURs) will continue as before with funding to come from the agreed £2bn.

Statement from PSNC Chief Executive Sue Sharpe

The pressures on the NHS are showing no signs of easing and the health service remains a difficult environment both to work and negotiate in. Negotiations are not straightforward with testing efficiencies demanded of all healthcare providers, and it was essential to protect funding levels for community pharmacies.

Community pharmacy provision of NHS flu vaccinations makes absolute sense for patients and for commissioners, and a national service will give pharmacies the chance to offer a fairly funded professional service to a full range of eligible adult patients. The funding for the service comes from outside the agreed £2.8 billion and so is a welcome additional income source for contractors. It is an important step forward for the sector as we expand the provision of care and public health services alongside the dispensing of medicines.

The commissioning of the new service shows that our messages about the impact pharmacy can have are starting to get through, and we must make the most of every opportunity given. We have been really frustrated by the delays in confirming the service, which we know will affect pharmacy planning and deployment in 2015/16, but despite this we believe we will be able to improve vaccination levels significantly this year.

PSNC is also pleased to have reached agreement to work with NHS England and other stakeholders to assess the costs of the Electronic Prescription Service (EPS). We know this has been a big concern to contractors as GP practices have adopted EPS, and we have been able to provide some analysis of increased costs to the NHS to persuade them that the current systems increase and do not reduce dispensing time. The joint work programme will build on this.

As last year, the Drug Tariff will be set to ensure delivery of £800m in retained margin; with £2bn being paid in fees and allowances. PSNC will continue work aimed at reforming the mechanisms for the delivery of margin to equalise opportunity to earn margin income and make the system as fair as possible to all contractors. 

Over the Easter period contractors undertook an audit on the emergency supply of medicines, which is still being analysed.  We hope this will provide evidence of the positive impact that pharmacies can have in reducing the burden and costs of managing urgent supplies

Although the delays in announcing the flu vaccination service have been frustrating, we have been able to complete the negotiations earlier on than usual in this financial year and this gives stability and reassurance for contractors.

Over the coming months we will be working hard with NHS Employers and NHS England to ensure that pharmacy teams, patients and the rest of the health service are ready for the new service. There will be challenges, and not everyone will welcome the news of pharmacy’s extended role, but community pharmacies are ready for this and the evidence and benefits for patients will speak for themselves.

This agreement shows that the NHS is starting to see the value that pharmacies can offer. It reflects PSNC’s policy to build value around the core supply service and it will further cement the importance of pharmacy’s role within the NHS. It is also a testament to all the work that LPCs and pharmacies have been doing to offer local services already – local work has been crucial in helping to demonstrate the value of vaccination services and enabling us to make the case nationally.

We are now preparing for the next round of negotiations to agree services that are manageable for pharmacies, fairly funded and offer good value for the NHS. Using community pharmacists and their teams to reduce unnecessary demands on general practice and other NHS services is essential if the NHS is to make best use of very scarce resources, and we know pharmacies can do a lot. We still suffer from pockets of ignorance and prejudice, even today, and progress is slower than we would like. But we are moving forward.

Further Information for Contractors

For more information on the community pharmacy funding settlement for 2015/16 and the new Advanced Service please read the PSNC Briefings below.

The Briefings have been written to help contractors and LPCs to understand the agreement, new service and changes to the CFCF. They outline the changes pharmacies will need to make, explain how PSNC will help them to prepare for the new service, and provide background material that may be of interest.

PSNC Briefing 034/15: Community Pharmacy Flu Vaccination Advanced Service

PSNC Briefing 035/15: Changes to the Community Pharmacy Contractual Framework (CPCF) 2015/16

PSNC Briefing 036/15: The 2015/16 Settlement Agreement and Funding

PSNC Briefing 037/15: Contractor FAQs on additional 2015/16 settlement elements

PSNC Briefing 038/15: PSNC Update on negotiations on a national Minor Ailments Advice Service

Comments from PSNC members

You can read comments from PSNC’s Committee members including subcommittee chairs and Negotiating Team members here:

Reaction to the 2015/16 settlement

PSNC and NHS joint press release and summary

PSNC and NHS Employers have issued a joint press release and produced a summary of the agreement:

Press Release – Changes to the Community Pharmacy Contractual Framework for 2015/16

Summary of 2015/16 Community Pharmacy Contractual Framework agreement

Actions for Contractors

Community pharmacy contractors are advised to familiarise themselves with the new settlement details and in particular with the changes that have been agreed to the CPCF and the new Advanced Service. You may wish to:

  • Read the PSNC Briefings on the settlement and new service;
  • If you already provide flu vaccinations, consider with your team how you can get ready to switch to the national service later this year (more guidance on this will be available in due course);
  • If you do not already provide flu vaccinations, consider what you might need to do to start when the national service launches, reviewing training options and other preparation (more guidance will be available on this in due course);
  • Review working practices to ensure that you and your teams can build the new service into your routine work as well as continuing to offer the New Medicine Service, MURs, and any local services; and
  • Sign up to PSNC’s Newsletters to ensure you don’t miss out as more information on the service and CPCF changes becomes available. Sign up at

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