Funding during the pandemic

Published on: 1st April 2020 | Updated on: 29th March 2022

As part of ongoing discussions abut the impact of COVID-19 on the sector, PSNC made representations to the Government about the immense pressure pharmacies are under and the need for additional funding to recognise COVID-related costs.

This page provides information on the agreed changes to funding made during the pandemic.

Page last updated: 19th December 2021

Payments for COVID-19 related costs

The arrangements for payment of contractors’ COVID-19 cost claims in October 2021 were finalised with the Department of Health and Social Care (DHSC) and NHS Business Services Authority (NHSBSA).

All contractors that made a claim during the summer claiming window, even those identified by NHSBSA as needing pre-payment verification, received a payment at the start of October 2021.

The vast majority of contractors who made claims (95% of them) received a payment for the full value of their claim in October 2021, although these are still subject to post-payment verification.

As we previously announced, the overwhelming majority of contractors (more than 9,900) submitted a claim for their COVID-19 related costs over the summer. These claims amounted to more than double the £120 million offered initially to the sector by HM Government and rejected by PSNC as insufficient.

The NHSBSA has been processing contractors’ claims in line with the Drug Tariff which outlined the categories according to which contractors could claim and clearly stated that claims would be subject to pre and post-payment verification.

Those requiring pre-payment verification

The NHSBSA has identified a small number of contractors whose claims appear to be outliers and require verification before receiving payment of their claim, including:

  • Claims exceeding one third of annual NHS income in 2020/21 for contractors who opened after March 2019 or an average of 2019/20 and 2020/21 income for contractors who opened before March 2019;
  • Claims where initial review identifies a risk of a potential error that could result in a significant overpayment, e.g. where claims are likely to fall outside the categories for which contractors were eligible to claim for.

These contractors requiring verification before full payment will be contacted directly by NHSBSA about the issues affecting their claim. While their claims are being processed, they will be paid a sum of money in October in line with their additional advance repayments, i.e. one sixth of the additional advance payments they received. If their claim is still outstanding in another month because the NHSBSA has been unable to verify the claim, then they will once again be paid in November in line with their additional advance repayments (i.e. another sixth of their additional advances) unless the claim is outstanding because the evidence requested by the NHSBSA has not been provided or does not support the claim submitted. At the end of this process, the balance between the verified claim amount and these interim payments will be paid / recovered as appropriate.

An amendment will be made to the Drug Tariff to reflect these arrangements, and all contractors receiving partial payments in October can expect to receive an individual letter from NHSBSA.

The NHSBSA will also conduct post-payment verification on claims. If requested by the NHSBSA, contractors must submit the evidence supporting their claim within 5 working days.

PSNC will continue to engage with DHSC on the claims processes including those that underpin appeals, should any be necessary.

Details of other COVID-related payments can be found below.

Advance payments

HM Treasury insisted that the sector will need to pay back these Advance Payments in full. DHSC plans to take back repayments in six equal monthly sums, also starting from October 2021.

Recently opened pharmacies

Following representations from PSNC, community pharmacies that newly opened (including any changes to ownership, consolidations, mergers etc.) between 1st March 2020 and 30th June 2020 can receive advance funding to help mitigate cashflow issues due to COVID-19. Different arrangements to calculate uplift payments were needed for new pharmacies that opened between 1st March 2020 and 30th June 2020 because of the method use for calculation of the advance payments.

DHSC announced that, as long as these recently opened pharmacies provided NHS pharmaceutical services during these months, they will be eligible to receive a share of the total uplift of circa £370 million in advance funding given to pharmacy contractors (see historical details below).

Click here for more information, including how the uplifts will be calculated

£20m on 1st July

Ministers agreed to inject a further £20m of advance funding into community pharmacies at the end of June. This followed ongoing representations from PSNC about the cashflow problems facing many contractors as a consequence of the COVID-19 pandemic. This was paid at the same time as the 1st July payment. The total advance funding is smaller than in previous months because although contractors are still reporting additional COVID-19 related costs and cashflow problems, these are less than those which they experienced through the initial peak of the pandemic.

NHSBSA website: COVID-19 uplift to pharmacy contractors’ payment on 1 July

£50m on 1st June

Minsters agreed to inject a further £50m of advance funding into community pharmacies at the end of May. This followed ongoing representations from PSNC about the cashflow crisis facing many community pharmacy contractors and businesses as a consequence of the COVID-19 pandemic. This was paid at the same time as the 1st June payment.

NHSBSA website: COVID-19 – Uplift to pharmacy contractors’ payment on 1 June

£300m in April and May

Ministers agreed to inject a total of £300 million of advance funding into community pharmacies across April and May 2020 in recognition of the significant cashflow pressures facing the sector at this point in the COVID-19 pandemic. This was paid as ‘uplifts’ to contractors’ January 2020 and February 2020 payments in early April 2020 (worth £200m) and May 2020 (worth £100m).

NHSBSA website: COVID-19 – Uplift to pharmacy contractors’ payment on 1 April and on 1 May

Accounting for C-19 advance payments

From April to July 2020 community pharmacies received a cumulative £370m in incremental advances. These advances were loans to ease cashflow pressures while more formal data gathering and assessment of the costs of dealing with the COVID-19 pandemic were collated. The advances were not ‘new money’ for the sector and it was clearly stated that the payments would need to be reconciled at a later data subsequent to negotiations between DHSC and PSNC. PSNC called for the loans to be written off, based on our analysis of the impact of COVID-19 on the sector, but this was rejected by HM Treasury.

We received questions from contractors who needed to discuss how to account for these loans at their year-end with their accountants or auditors. PSNC’s professional advisors have stated that they would expect that advances would be kept on a contractor’s balance sheet as creditors, and that in general loans are not subject to corporation tax. However PSNC cannot give formal tax advice and so if you are unsure about how you should account for the advances please seek advice from a professional.

Costs for protection of staff (e.g. PPE and physical barriers)

To support the installation of bollards, physical barriers or screens, NHS England and NHS Improvement (NHSE&I) made a £300 payment to all pharmacies, except distance-selling pharmacies. This funding came from outside the global sum. The majority of contractors received this payment on 1st May 2020. Whilst it was not itemised on the FP34 Schedule of Payments, the NHS Business Services Authority (NHSBSA) sent letters to contractors confirming the payment. Any contractors who temporarily closed their pharmacy for more than two weeks since 31st March 2020 but made adjustments for social distancing prior to or shortly after the closure, were required to claim the £300 payment by 5th August 2020.

Since September 2020, contactors have been able to obtain free PPE from the Government’s PPE portal. For PPE (including hand sanitiser) purchased prior to this, contractors had until 12th Febrary 2021 to make a claim for reimbursement of their PPE costs.

Medicine deliveries to patients (Pandemic Delivery Service)

During national lockdown in England, pharmacies (excluding DSPs) were paid a monthly allowance to recognise the work involved in supporting the group of shielded patients to obtain their medicines safely in accordance with the changes made to the pharmacy Terms of Service. The monthly payment was aligned to the banding used for the Transition Payment, with a pharmacy dispensing the average number of prescriptions each month receiving £500 per month.

For those who chose to provide the Pandemic Delivery Advanced Service, contractors (excluding Distance Selling Pharmacies) were able to claim, via the Manage Your Service (MYS) portal, a payment of £6 (including VAT) per delivery, as part of the normal end of month process.

The service was later extended to cover people notified of the need to self-isolate by NHS Test and Trace.

Further information on the service can be found here

Opening on some Bank Holidays in 2020

Early May Bank Holiday (8th May 2020)

NHSE&I required community pharmacies in England to open between 2pm and 5pm on Friday 8th May 2020 (the Early May Bank Holiday). PSNC and NHSE&I agreed that contractors would be funded at a rate of £250 per hour for a maximum of three hours. Contractors needed to submit their claim for the £250 per hour payment using the Manage Your Service (MYS) portal between the 25th May 2020 and 22nd June 2020, with payment due on 1st July. This payment did not appear on the FP34 Schedule of Payment but the NHS Business Services Authority (NHSBSA) provided confirmation of payment via individual contractor letters.

Good Friday (10th April 2020) and Easter Monday (13th April 2020)

NHSE&I required community pharmacies in England to open between 2pm and 5pm on the two Easter Bank Holidays, Good Friday (10th April 2020) and Easter Monday (13th April 2020). PSNC and NHSE&I agreed that contractors would be funded for these openings at a rate of £250 per hour. Contractors were required to submit their claim for the £250 per hour payment using the MYS portal between the 17th April and 5th May 2020, with payment due on 1st June. This payment did not appear on the FP34 Schedule of Payment but the NHSBSA provided confirmation of payment via individual contractor letters.

£15m increase in reimbursement prices

DHSC increased medicine reimbursement prices by £15 million from June 2020. The increase was being made based on margin data from 2019/20 along with predictions for delivery in 2020/21. PSNC repeatedly highlighted the significant cashflow problems facing community pharmacy contractors during the pandemic.

PSNC pushed DHSC to retain the £15 million uplift for the Category M in January and April 2021. PSNC and DHSC will continue to monitor carefully medicine margin data in order to identify if, and when, further increases are required.

Category M prices can be found here

Death in service benefits for frontline healthcare workers

DHSC announced a life assurance scheme for healthcare workers on the frontline in England.

In recognition of the increased risk that healthcare staff are facing during the pandemic, the scheme will make a payment of £60,000 to the estate of eligible individuals who die from COVID-19 contracted during their frontline essential work.

Information about the scheme states it will remain open until the relevant NHS workforce provisions of the Coronavirus Act 2020 expire and that deaths which occurred before the announcement of the scheme will be considered. It has also been confirmed that the scheme is non-contributory, which means there is no cost to staff or employers. Separate guidance for employers has been published which outlines their particular responsibilities regarding the scheme, such as making employees aware of it.

The Secretary of State’s letter of 7th May 2020 to the Royal Pharmaceutical Society (RPS) details that is is the Secretary of State’s intention to exercise his discretion to include relevant members of the pharmacy workforce that meet the scheme’s eligibility critiera. The letter should be referenced in any claim. In order to make a payment, the Secretary of State must be satisfied that on the basis of evidence the individual was exposed to a high risk of contracting coronavirus in circumstances where they could not reasonably avoid that risk by the nature and location of the work they carried out.

Full scheme details for both claimants and employers can be found on the NHS Business Services Authority (NHSBSA) website.

How and when payments will be made

A number of new COVID-19 related payments for community pharmacy contractors have been announced during the pandemic.

PSNC has created a payment timetable and deadline tracker to assist community pharmacy contractors with checking and claiming payments for services including the Pharmacy Quality Scheme (PQS), Pandemic Delivery Service, GP Community Pharmacist Consultation Service (CPCS), Discharge Medicines Service,  COVID-19 vaccinations and Hepatitis C testing service.

The guide, which will be regularly updated, summarises how and when the different payments will be made.

View our Payment timetable and deadline tracker webpage

Return to the main COVID-19 hub page.

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