Settlement 2014/15: PSNC members respond

Published on: 22nd September 2014 | Updated on: 15th March 2022

Following the announcement of the funding settlement for 2014/15 a number of PSNC members have made statements.

These may be of interest to contractors as they give some context on what the settlement means, as well as being available for journalists. Please note that the opinions given represent those of the individuals rather than those of the Committee as a whole.

If you have further questions, please contact Zoe Smeaton, Head of Communications and Public Affairs.

For further information on the 2014/15 settlement see PSNC’s Announcement and PSNC Briefings 015/14 to 019/14.

Peter CatteePeter Cattee, Chair of PSNC’s Funding and Contract Subcommittee, a PSNC Negotiating Team member, and CEO of PCT Healthcare

This settlement has been a long time coming; but I hope that it brings some relief for pharmacy contractors. The NHS is putting pressure on all its service providers to reduce costs and improve efficiency, so protecting funding levels for pharmacies has been no easy task and I am pleased that we have been able to stabilise funding against the backdrop of cuts.

From this October we will see additional money being put into Category M – this is unusual and I hope it will be welcome news. But contractors must also recognise that from November it will be balanced by a reduction in fees to ensure that we are on target to deliver the agreed £2billion in fees and allowances.

The agreement by the NHS to allow us £800m in purchase margins is a win for us. Although the money is not new for us because it reflects the benefits of excess margins that we have had in previous years; the increase to £800m in assured purchase margins is a step forwards and shows how much the health service does value the supply function we provide.

In exchange for this we have agreed to work with the NHS on some changes and reforms to reimbursement. This will be complex and time-consuming work but PSNC’s Funding and Contract Subcommittee includes representatives from pharmacy businesses of all types and contractors can be assured that our priorities will be to ensure stability and fairness in reimbursement, and we hope the work to stabilise the delivery of margin will help to reduce some of the cash flow problems we have seen in recent years.

Despite the agreed purchase margins and the commitment this settlement shows to supporting our core supply role, the settlement includes changes to develop our medicines optimisation services and this does once again highlight the critical need for us to focus on service provision. Contractors must understand that focusing on supply only is not an option; the NHS has made clear its intentions to move us towards a more service led contract, taking steps to do so with this settlement, and businesses must start to adapt to that.

Gary WarnerGary Warner, Chair of PSNC’s Service Development Subcommittee, a PSNC Negotiating Team member, and an independent community pharmacy contractor

Many community pharmacies have done a brilliant job adapting their working practices in recent years to provide a variety of services around the core dispensing function. This has been challenging, and, at times, painful, but I believe it is absolutely the right thing for us to have been doing.

Although the safe and efficient supply of medicines is vital to the NHS and must not be undervalued, it is not going to be enough on its own to safeguard our future. The NHS’ financial problems are worsening, and as all parts of the service are squeezed the dispensing function could be vulnerable to emerging business models, such as hub and spoke arrangements. To ensure that commissioners looking to cut costs do not turn to us as a way to do so, we must build as much value as possible around the supply function, and that means helping people to get the best outcomes from the medicines we are giving them; offering public health advice and clinical services that can improve their health and lifestyles; and supporting people to live independently and to manage their conditions to ease pressure on other parts of the NHS.

On PSNC’s Service Development Subcommittee we have been working hard to create the opportunities for pharmacies to do all of this and this settlement is a welcome and important step along that path. The inclusion of funding for the New Medicine Service (NMS) within the overall settlement means we now have two key medicines optimisation services at the heart of our contractual framework; and the development of the MUR service shows a clear commitment from the NHS to it. The refocus on Repeat Dispensing and the decision to have a national audit on emergency supply also show just how interested the health service is in what we can do beyond our core dispensing role and in how we can and do reduce pressure on other health professionals.

I know that some contractors are still doubtful about the benefits of moving towards a contractual framework that rewards the delivery of services as well as dispensing; but I am convinced that this is something we must do – it helps to cement our role at the heart of the NHS; it means that as health professionals we have more to offer our patients; and it helps to secure the future of our businesses, putting our destinies in our own hands, rather than us relying solely on the prescriptions issued locally for our success. I hope that pharmacists will be pleased to see the faith that the NHS has placed in some of our key services in this settlement, and I look forward to us continuing to provide them to improve patient outcomes and experiences – it is not always going to be easy, but if we can grasp these opportunities I think we can play a very important and rewarding part in our evolving NHS.

Kirit PatelKirit Patel, PSNC Vice-Chair and Founder and Chief Executive of the Day Lewis Group

Community pharmacy contractors have been very patient waiting for news on PSNC’s funding negotiations and everyone on the committee is grateful to them for that; it has been a frustrating time for all of us looking to manage and plan our businesses.

As a member of PSNC I know how much work has gone into these negotiations; they have not been easy. Our paymaster, the NHS, is in a difficult situation with no extra money to invest in pharmacy or other providers. We have had to make our case to protect pharmacy funding very robustly, showing the value that pharmacies can and do deliver and making clear arguments for the investment in the sector to continue. 

At first glance the increase in the agreed settlement looks like a fantastic result for pharmacy, particularly when everyone else is being subjected to cuts or increased workload; but contractors must understand the context. Although the agreed sum has gone up, the increase in assured purchase margins reflects the benefits that we have had in previous years when we have been able to keep purchase margins that have been delivered over and above the agreed £500m.

Businesses must not confuse this news as meaning there will be a big increase in their income over the next six months. In fact over the second six months of the year contractors will earn around £870 less than they did in the first half; but that is entirely manageable for a pharmacy business, and it reflects a smoother delivery of funding over the year than we have seen in some previous years.

And the decision to allow us to increase assured purchase margins by £300m is still a good result – it means the excess margins we have been making are now on the table, included within the settlement, and I’m pleased that we have been able to protect that income for pharmacies. But it’s also a fair deal for the NHS – because the £800m comes from purchase margins, the health service is not finding that cash, it comes from the margins our businesses already make through effective purchasing and stock management; the same effective purchasing that helps to keep medicines prices down and in turn saves the NHS millions of pounds.

Contractors will no doubt say that we haven’t done enough, and of course our eye is always on what comes next and what more we can do, but I do think that this settlement is an important one for us, and I believe it represents a good and a fair result for both our businesses and the NHS.

Garry MyersGarry Myers, a PSNC Negotiating Team member and an independent community pharmacy contractor

As well as owning and managing my community pharmacy business I am involved in the management of a general practice so I have seen first-hand the workload and financial pressures that doctors are coping with at the moment. Community pharmacy is certainly not alone in facing business challenges in the reformed NHS, and I am pleased that through our negotiations we have been able to protect pharmacy’s funding in exchange for changes that I think will be manageable for contractors.

Although they bring difficulties of course, I believe that the challenges being faced by the NHS also give us an opportunity to expand our role and improve patient care. By doing this and reducing burden elsewhere in the NHS, we can really start to cement our role as key players at the heart of the NHS and this will help us to make the case for the NHS to maximise the support that it gives our businesses.

Repeat Dispensing can be a very useful service with the potential to both reduce pressure on practices and improve care for patients, so I hope that community pharmacy contractors will see the value of that and will really engage in trying to increase their Repeat Dispensing levels. Because of our role within a medical practice I know the huge potential of this service to create significant workload reductions for GPs, along with associated financial savings, and this is all evidence that we can use in the future as we continue making the case for community pharmacy funding to be maximised.

In order to survive in the current NHS, pharmacy needs to work in full collaboration with primary care colleagues and show that it is in tune with their objectives and those of the health service as a whole. In line with this ambition, the commitment that we have made to patient safety incident reporting brings pharmacy up to the same level as other primary colleagues and it is important that pharmacies recognise the need to engage with this agenda following the Francis report. 

I also believe that aligning our contract with that of GPs will help to achieve this and I will certainly be making the case for practices to be urged to improve their engagement with pharmacies and LPCs in accordance with the contents of the settlement to accelerate deployment of the Repeat Dispensing service locally. I also hope that the additional MUR targeting and the continuation of the NMS that we have agreed give us yet another opportunity to work more closely with GPs and CCGs as these services can offer an additional tool in their attempts to control drug budget expenditure via improved medicines optimisation.

Bharat PatelBharat Patel, a PSNC Negotiating Team member and an independent community pharmacy contractor

The reformed NHS is an extremely challenging environment to be negotiating in. Money is very tight and we have seen this reflected in the funding available for all health professionals; pharmaceutical services are no different. Given that context, I am pleased that we have been able to protect and stabilise funding levels this year and I think that is enormously beneficial for contractors and their businesses. The time taken to get to this point has been very frustrating; but we needed to take the time needed to be sure that we were getting the best possible outcome for all our businesses, and I hope contractors will be satisfied that we have done so.

The development of and commitment to our medicines optimisation services put pharmacy on the right track and I hope that contractors will support the NMS and really get into top gear to provide more services now – that will benefit pharmacies as well as patients and the NHS.

Contractors will also need to adjust to the three changes to the CPCF requirements; but I hope they will see the benefits of those changes to the sector as well as to the NHS.

Repeat Dispensing is a nationally funded service through which we can help our patients and reduce the burden on GP practices; so it makes no sense for us not to promote it and I hope pharmacies will refocus their efforts on this now. Similarly, reporting patient safety incidents is something that should ultimately benefit the profession as well as the health system because it is only by creating an open learning culture that we can develop and improve the safety of our practice. And finally I am excited about the clinical audit on emergency supply; this will be the first national audit of its kind and if it can help to highlight an important but often unrecognised part of our work, showing that value we are delivering, then I think it will pay dividends.

I would like to thank contractors for their patience during these lengthy negotiations and also for continuing to rise to the challenge of delivering a range of services alongside their daily dispensing.

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