Pharmacy contract consultation to review medicine margin and reimbursement, says Kinnock

Kinnock confirms that an announcement on the 2025/26 GP contract would be made before April 2025

The 2025/26 pharmacy contract consultation will include a review of the medicine margin and reimbursement arrangements, health and care minister Stephen Kinnock has confirmed.

Kinnock made this statement in response to a written question from Nick Timothy, Conservative MP for West Suffolk, who asked the secretary of state for health and social care, if he will review the reimbursement system for pharmacies and GP practices dispensing medicines.

Kinnock stated that consultation with Community Pharmacy England (CPE) for the 2025/26 Community Pharmacy Contractual Framework (CPCF) has started and will include “reviewing the allowance for medicine margin as part of funding, and any further changes to the reimbursement arrangements.”

However, he clarified that there are currently no plans to review the reimbursement system for general practices (GPs) dispensing medicines.

Kinnock said: “Dispensing practices receive a dispensing fee, approximately £2.00 to £2.30 per item, which is intended to cover dispensing costs.

“This fee is calculated based on forecasted volumes of prescriptions to be dispensed and the size of the funding envelope, according to a methodology agreed by the Department, the General Practitioners Committee (GPC), NHS Employers, and the Welsh Government.”

He also noted that an updated methodology, agreed between the British Medical Association (BMA) and NHS England, was implemented in October 2023 to address the issue of continuing fluctuation between over and underspend year on year, the alternating pattern of over and under spends.

Nevertheless, he said the ongoing 2025/26 GP Contract discussions will consider all proposed policy changes, including dispensing practices, and an announcement will be made before April 2025.

Consultations between NHS England and the BMA’s GPC England on the new GP contract began on 19 December.

Meanwhile, the Dispensing Doctors' Association (DDA) has announced they will follow up on this issue in Parliament to clarify “the confusion between reimbursement and remuneration.”

When the start of the 25/26 pharmacy funding contract was announced on 28 January, Kinnock acknowledged the vital role of community pharmacies in shifting care from hospitals to the community.

He committed to working closely with CPE to agree “a package of funding that is reflective of the important support that they provide to patients up and down the country.”

The National Pharmacy Association (NPA) has urged the government to conclude funding consultations urgently and ensure that much-needed financial support reaches struggling pharmacies.

The association has warned that if the new funding settlement fails to meet its five key tests, they may recommend collective action—including reducing opening hours to contractual minimums.