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Contractors must prepare for a 'pinch' towards end of January 2019, says PSNC

The Pharmaceutical Services Negotiating Committee has warned that the government does not want to pay more for pharmacy services and that community pharmacies will notice the effects of the new funding settlement in early 2019.

Simon Dukes, chief executive of the PSNC

Source: Jeff Gilbert

Simon Dukes, chief executive of the Pharmaceutical Services Negotiating Committee, has said pharmacy negotiators did not give in to government demands during the negotiating process for the 2018/2019 contract

Community pharmacy contractors should prepare for a “pinch in cash flow” towards the end of January 2019 as a result of the funding settlement for 2018/2019, the Pharmaceutical Services Negotiating Committee (PSNC) has warned.

It also said that the government is looking to drive down costs in the future and does not want to pay more for pharmacy services.

But Simon Dukes, chief executive of the PSNC, said pharmacy negotiators did not give in to government demands during the negotiating process for the 2018/2019 contract, and that they were “very aware of the consequences of the decisions made”.

“We expressed deep concern [to the Department of Health and Social Care (DHSC)] about the financial pressures contractors are currently under and the fact that this [settlement] will affect reinvestment in the future,” he said.

Dukes also said that the agreement was needed to enable discussions to move onto 2019/2020 and lay the foundations for an improved relationship between the PSNC and the government.

The PSNC announced on 22 October 2018 that community pharmacy funding will not be cut by £33m for the 2018/2019 financial year, as was expected, and will instead be maintained at £2.59bn.

It also confirmed that the single activity fee (SAF) would be lowered from £1.29 to £1.26 from November 2018 and that Category M prices would reduce by £10m per month from November 2018 until March 2019 in order to repay excess margin earned by pharmacies in previous years.

Speaking at a webinar held by the PSNC on 30 October 2018, Mike Dent, director of pharmacy funding for the PSNC, explained to contractors that the funding settlement would result in a “pinch” in their cash flow towards the end of January 2019.

“In early December [2018], you will submit your November prescriptions, from which point these changes [agreed in the settlement] will take effect, and the [NHS Business Services Authority] will give you an advance in the end of December/early January payment — this advance is based on October’s average item value, before the reduction in Category M and while the SAF was £1.29.

“So, at the end of January [2019] when they recover the advance and pay you the actual amount due for November [2018], you will see a reduction and you will also have an advance based on November’s average item value which will, of course, have gone down so there will be a pinch in your cash flow at the end of January [2019].”

It was also acknowledged that some contractors had been dipping into their personal bank accounts in order to keep their businesses going, something that was highlighted to the DHSC. But Dent said that there would be no more money for pharmacy services in the foreseeable future.

“We do know that the NHS is very concerned about the amount it spends on distributing medicines — this is unlikely to change in near future,” he said.

“There will be no more money — they are looking for innovation to drive down costs — the government has decided it does not want to pay more for pharmacy services.”

Citation: Jizak DOI: 10.1211/PJ.2018.20205681

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