DOH announces Funding cuts for Community Pharmacy – Oct 2016

Important News

The Government has imposed a two-year funding package on community pharmacy, with a £113 million reduction in funding in 2016/17.

Please see Excel spreadsheet tab 2 for a list of pharmacies in Leicester City and County supported by the Pharmacy Access Scheme. (Additional Item)


This will take total funding to £2.687 billion for this financial year. This is a reduction of 4% compared with last year, but it will mean that contractors will see their funding for December 2016 to March 2017 fall by an average of 15% compared with current levels.

This will be followed by a reduction in 2017/18 to £2.592 billion for the financial year, which will see funding levels from April 2017 drop by around 7.5% compared with current levels.

Read the Government documents outlining the package, including their impact assessment and a list of pharmacies eligible for the Pharmacy Access Scheme, here.

PSNC has published indicative income tables excel spreadsheet where you type in your item numbers to predict monetary impact to help contractors to predict the impact on their businesses.


As part of the package the Department of Health (DH) will make changes to the way in which funding is distributed, introducing quality payments and a Pharmacy Access Scheme (PhAS). Further information on these and on which pharmacies will be eligible for the payments is outlined in PSNC Briefing 057/16: Information for Contractors.


The Government has also recently announced a pharmacy urgent repeat medicines supply pilot along with plans to refer NHS 111 callers with minor ailments to pharmacies. The service specification for this is still under discussion but further details are also available in PSNC Briefing 057/16: Information for Contractors.



The imposition, which was announced by minister David Mowat in Parliament today (October 20th), comes after PSNC unanimously rejected the package last week.

Read PSNC’s letter rejecting the package here.

Statement from PSNC Chief Executive Sue Sharpe

Today’s news is extremely disappointing but does not come as a surprise; it became apparent some time ago that the Government was unshaken in its determination to make a massive cut to community pharmacy funding by reducing fees and allowances. Indeed, it has been clear in both the wording of the original letter sent on December 17th and in our discussions with the Government and NHS since then that there was to be no genuine consultation on the total funding sum.

PSNC could not accept a funding offer which was damaging to the sector and which will adversely affect the ability of pharmacies to provide patient care.

In response to the consultation on changes to community pharmacy, PSNC set out the need for the Government to make decisions about community pharmacy services based on a number of principles that put the needs of patients and communities, as well as evidence, at the heart of the process.

Sadly, this has not been the case, and we are instead now seeing the implementation of a decision for which no evidence has been produced and which many people, including patient and GP groups, have warned will have a detrimental effect on patient care and lead to further pressure on other healthcare services. This is a short-sighted and ill-judged approach to take, particularly when alternative constructive proposals that would address the need for the NHS to make cash savings have been put forward by PSNC.

It is a sad reflection on the NHS on which we all rely to see it taking such a rash decision with so little justification. But this is not the first time that we have seen decisions that do not seem to be in the best interest of patients or the NHS being made. NHS England’s decision to walk away from commissioning a Minor Ailments Advice Service last summer was damaging to the NHS and to patients. Such decisions call into question the judgement of those in control of community pharmacy policy.

In the past PSNC was able to have constructive negotiations with the NHS based on a mutual desire for community pharmacy to be commissioned and funded to deliver the best possible service for patients and local communities. These conversations were based on trust and respect that we had built up with policy makers over many years. It is very sad that real consultation with us has now been abandoned, and the approach through the last six months has instead been of an entirely different character; “we can do it, so we will do it”, seems to be the mantra. The lack of real consultation and clarity has been a common theme throughout the consultation period.

PSNC will study the Government’s decision carefully to inform our own decisions about next steps.

The funding cut, combined with the previously announced reductions to Category M prices following a significant over-delivery of margin last year, will have a significant and negative impact on contractors’ businesses. We would strongly advise contractors to make whatever provisions they can for the funding reductions. These will be very challenging times.

PSNC remains keen to work with the NHS on changes to the Community Pharmacy Contractual Framework that will allow the development of clinical community pharmacy services so that patients and the NHS can get the most benefit and best value from community pharmacy.

Pharmacy closures 

Although we are unlikely to see pharmacies closing immediately, we expect that pharmacy owners will be forced to take steps to reduce costs. These are likely to include reducing opening hours and staffing, and stopping the provision of services which they are not obliged to provide, such as home delivery of medicines and the supply of medicines in compliance aids. We are very concerned about the impact that this will have on patients.

We will encourage LPCs and contractors to get together to consider how they can ensure vital local services are maintained. They may need to approach local commissioners to seek funding for services where they are not able to cover their costs.

Impact on patients 

Pharmacies have always met demands for help from their patients, particularly in the winter, acting to relieve pressure on other NHS providers. They have done this readily and willingly, but as they are forced to review their operating costs and consider staff cuts, patients may find that they have to wait longer to receive advice that would previously have been readily available. The NHS must recognise this as winter pressures set in and it turns as usual to pharmacy for help.

The Pharmacy Integration Fund 

While we are pleased that NHS England has been able to find £42 million over the next two years to support integration, we strongly believe that this should be spent on supporting national community pharmacy services that will better help patients and reduce demand elsewhere on the NHS and will be seeking clarity about how it will be allocated.

Impact on other NHS services 

Lots of big policies could be railroaded by these community pharmacy proposals, for instance if social care cannot cope with the increase in people left without support, there could for example, be a rise in hospital admissions.

The removal of Establishment Payments will target for the greatest cuts the low dispensing volume pharmacies in areas with the highest health needs. They would see fee income reduced by around 20% next year, at a time when the NHS has said that efficiency targets of 4% are too high to be achievable, and has reduced targets to 2%.

Further Information for Contractors

For more information on the Government’s announcement, please read the PSNC Briefings below which have been written to help contractors to understand and prepare for the imposition.

PSNC Briefing 057/16: Funding imposition for 2016/17 – Information for Contractors

PSNC Briefing 058/16: Funding imposition for 2016/17 – Frequently Asked Questions

PSNC Briefing 059/16: Funding imposition for 2016/17 – Indicative Income Tables

List of pharmacies included in the Pharmacy Access Scheme (Excel format with LPC, LA, CCG and NHS England local office data)

Contractors may also wish to read the Government’s own documents outlining the funding package.(attached)

The LPC are still working to raise awareness of the issues in questions and urgent questions and letters have been sent to the minister and the secretary of state. We will continue to do so. We are extremely disappointed with this outcome but urge all contractors to plan for the changes as soon as possible and be assured that there are many key national leads and MP’s who recognise our valuable contribution and expertise.


It is recognised that these funding cuts are detrimental to community pharmacy’s, the local NHS and our patients,

please see the link to the press release where Jon Ashworth challenged the proposals in the house of commons

we also have kindly been supported by the deputy city mayor who has also sent a letter to Jeremy Hunt with support from many local MP’s who recognise the value of the Community pharmacy network and our role.


We will be holding a support and information event with contractors very soon to discuss ways forward to manage these changes