NPA’s new board adopts ten principles for transformed pharmacy contract in England

The new board of the National Pharmacy Association (NPA) has adopted 10 principles for transforming the contractual framework in England.

The board met for the first time in April, believes that the current Community Pharmacy Contractual Framework is failing NPA members, the wider sector, the NHS, Government and patients.

The association’s new vice chair, Jay Badenhorst, said: “We can’t wait until the current framework limps to its finish line in 2024 before giving serious thought to the new race we must all run in the future.”

“Before negotiations for a new contract begin in earnest, we want to make our position clear to all of those who will be involved in its development. Years more of the same would be totally unacceptable. Tinkering at the edges of the current arrangements as the basis for a new deal could not achieve the transformation that is needed.”

Former chair of the NPA, Andrew Lane, listed some of the principles in a speech to industry leaders in January, but this is the first time the approach has been agreed in its entirety, following months of testing with NPA members.

Alongside these contract principles, the NPA is working up further components of a vision for change, to feed into the current vision project led by PSNC, the King’s Fund and the Nuffield Trust.

An NPA spokesperson added that several of the 10 principles could begin to be addressed by the eagerly anticipated Primary Care Recovery Plan, if it contains meaningful commitments to unleash the potential of community pharmacy. However, the principles need to be embedded in a coherent framework for the medium term, not just in one-off policy announcements, the spokesperson said.

The NPA’s 10 Principles for a New Deal for Community Pharmacy in England are:

1. Think Progressively. The current Community Pharmacy Contractual Framework is broken and cannot be repaired in its current form.  A fundamental rethink is needed if the sector is to recover, thrive and deliver for patients and the NHS.
2. Be aligned to the NHS and its objectives. The CPCF should facilitate the NHS Plan promise to “make greater use of community pharmacists’ skills and opportunities to engage patients”, as an integral part of the NHS – building an at-scale, ambitious, modern primary care offering.  Government, NHS, patients and the pharmacy sector should take a collaborative, ‘co-creation’ approach to imagining and engineering the future.
3. A fair deal for independents. Create a level playing field, so that independent contractors are not disadvantaged. Independents are unfairly treated by the ‘averaging’ processes on which the current arrangements rely; it is harder for them to secure the best medicine prices in the first place yet clawback is applied equally across the board. Furthermore, independents don’t benefit from the averaging effect which allows multiples to effectively hedge their risk.

1. Pay pharmacies in a timely fashion. The current system of ‘excess margin’ and ‘clawbacks’ are a barrier to investment and forward planning. They undermine confidence to modernise and implement new clinical services. How can it be acceptable to be told that you made too much money one or two years ago so you are getting a bill?
2. Value the whole of our care, supply and service, end to end, not transaction type by transaction type. Current payments do not properly reflect the level of health care advice provided, nor our public health value in relation to wider society. Many contractually ‘non-essential’ services are considered by patients to be essential yet these are not funded at all. Build a holistic recompensed offering on actual activity delivered and value created, using more real-world data.
3. There should be no more ‘dispensing at a loss’, for any items.  It is an absurdity that pharmacies often buy blind and effectively lose money the harder they work to track down stock. Overall, the NHS dispensing service should pay for itself and service income should be additional to dispensing income.
4. Empower and enable contractors.  The contract must allow contractors to be the master of their own destiny to a far greater extent than now. Current contract arrangements put pharmacy owners at the mercy of circumstances largely beyond their control – be it wholesale price rises or the reluctance of some GPs to refer into services like the Community Pharmacy Consultation Service.
5. Build services on supply (the two elements are not mutually exclusive). Our vision is a clinical, service-based future as the ‘front door’ to the NHS. However, this cannot mean abandoning the medicines supply function, which pharmacies have performed so well for so long. The link between supply and service is our history and our future. A mixed service and supply contract could deliver a structural change that both improves the clinical offering to the benefit of the NHS and patients and puts us into a much stronger business position.
6. Incentivise change. The government must be prepared to direct more money into community pharmacy.  Instead of moving forwards into new clinical roles, which the NHS and DHSC say they want, pharmacies are currently slipping back, forced to focus above all on maximising dispensing income, where the vast majority of the income opportunity sits.  This is the very opposite of the aspirations stated in the NHS Plan. A multi-year deal should contain guaranteed uplifts in ln line with inflation as a minimum. Any surplus (‘excess margin’) should be recycled into the development of pharmacy services.  This is the approach adopted in Wales.
7. Rebalance power. The Department of Health and Social Care and NHS England should consider introducing a degree of independent financial regulation that mitigates the risks of a monopsonistic purchaser using its power to achieve short term gain at the cost of sustainability. The current imbalance of power between the parties to contractual negotiations serves no-one in the long term.