Key Summary
- Community pharmacies receive £120m less in retained margin than a decade ago.
- Pharmacies are dispensing more medicines but with shrinking funding.
- Industry leaders urge urgent investment to protect patient access and prevent shortages.
The government has admitted in the Parliament that the retained margin funding for community pharmacies in England is worth £120 million less in real-terms compared with a decade ago.
In an answer to a query raised by North Shropshire MP Helen Morgan (Liberal Democrat), pharmacy minister Stephen Kinnock said that in 2025/26, retained margin was set at £900 million.
However, the government has confirmed that the real-terms value of retained margin in 2015/16, was £1.02 billion.
The £120 million gap is likely an underestimation of the true ‘gap’ as it does not account for the increasing dispensing workload and additional operational costs pharmacies have had to absorb since 2015/16.
The Company Chemists Association (CCA) claims that its analysis last September found that the 2024/25 value of margin was short by £430 million.
A recent CCA report has called for the need to increase retained margin in tandem with drug tariff pricing, to prevent ‘avoidable’ medicine shortages, with global manufacturers prioritising other markets over the UK for supply.
The country is already facing a shortage of certain essential drugs like aspirin and co-codamol, and the ongoing war in the Middle East is expected to further aggravate the situation.
The CCA pointed out that since 2015/16, the number of NHS prescribed medicines dispensed has increased by 16 percent, which means pharmacies are doing more work for a proportionally less funding.
In addition, 1,479 pharmacies have closed down since 31 March, 2016, a 13 percent contraction of the network, with many .
The government had last year raised pharmacy funding by 19 per cent, including raising the retained margin to £900 million a year, but the latest update shows the community pharmacy network remains fragile.
The government had agreed to “stabilise community pharmacy”, “build on what we have achieved to date”, and “lay the foundations for an independent prescribing service to harness its full potential in the future”.
However, the latest parliamentary response comes after the government acknowledged that CPCF funding in 2025/26 is £800 million less in real terms compared with ten years ago.
CCA chief executive Malcolm Harrison said, “This is yet another shocking finding, arising from a further question tabled on behalf of the CCA. This follows an earlier question that uncovered that the total funding envelope for 2025/26 is £800m less in real-terms than it was a decade ago.”
“Without investment in both tariff pricing and margin it will be patients who ultimately lose out.”
He added, “We really hope the Government delivers on its commitment to stabilise community pharmacy by providing the additional funding it so urgently needs”.
The negotiations for the 2026/27 Community Pharmacy Contractual Framework (CPCF) is currently in progress between the Department of Health and Social Care (DHSC) and Community Pharmacy England (CPE).
