DHSC to impose Category M adjustments for August 2024 despite strong opposition from CPE

The Community Pharmacy England says the reduction in prices is 'not an acceptable resolution to the situation' to the changes proposed by DHSC

In a contentious move, the Department of Health and Social Care (DHSC) is set to make adjustments to the Category M prices, which includes the wide range of generic medicines, starting in August.

Despite strong objections from Community Pharmacy England (CPE),  this decision follows an acknowledged error in the calculation of July 2024 Category M prices, which led to an unintended increase in reimbursements.

According to the pharmacy organisation, the DHSC's miscalculation has resulted in an approximate increase of £21 million per quarter in July's Category M reimbursement, translating to around £9 million per month.

Corrected calculations, however, indicated that there should have been a reduction of £6 million per quarter.

Consequently, the July quarter saw an erroneous overall extra reimbursement of £27 million.

Providing explanation for their objection, the CPE has said that "these amounts relate to systematic changes due to underlying movements in medicine buying prices in the market and are not changes related to margin adjustments or the margin survey of Independent community pharmacies".

While they have maintained that no mid-quarter corrections should be made and that the July reimbursement increase would be adjusted through the Margin Survey, the DHSC has decided to proceed with price reductions.

The DHSC plans to decrease Category M reimbursements by approximately £9 million per month starting in August.

Additionally, the extra reimbursement from July will be reclaimed via further Drug Tariff price reductions between October 2024 and March 2025.

Janet Morrison, CEO of Community Pharmacy England, has expressed strong opposition to the DHSC's plans, calling it an unacceptable resolution to the situation.

She further emphasised that the current margin system is inadequate and requires a thorough review.

"The margin system is not working as it needs to, and we have been calling for a review of medicines margin," Morrison said.

"Community pharmacy businesses are in a perilous and critical state due to the entrenched underfunding of the Contractual Framework.

"Community Pharmacy England’s firm position remains that the margin element of the CPCF, along with the overall funding quantum, needs urgent uplift as it is insufficient to reflect the ever increasing volume of dispensing and services provided by the sector.

"Any more reductions to funding are likely to exacerbate the stream of pharmacy closures we are seeing across the country, and put patient access to pharmaceutical services at risk," she added.

Moreover, the Chair of National Pharmacy Association(NPA), Nick Kaye, also expressed his opposition to the 'infuriating announcement' by DHSC and highlighted the need for fair funding through a second day of protest in the upcoming months.

He said: “It’s outrageous that pharmacy finances can be tossed about in this careless way by the Department of Health.

“When financial margins are already very tight, a clawback of this amount could worsen cashflow problems for independent pharmacies and risks further cutbacks and closures.

“The new government must urgently address our sector’s overall funding crisis and reform this up-down payment system, which toys with the finances of a critical healthcare service.”