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PSNC faces sector-wide criticism as deal on last two years of national contract shows no ‘fresh funding’


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Pharmacy bodies are “bitterly disappointed” that the latest deal on the national contract makes no commitment to “fresh funding”, with one organisation calling it “the biggest dis-service ever done” to community pharmacy.

The only commitment made in monetary terms was one in which NHS England agreed to write off a sum of £100m in excess margin earned by contractors in previous years. This allowance, which can’t be seen as new cash injection, was said to have been made in recognition of the pressures facing the sector.

The figure — reached after what the the Pharmaceutical Services Negotiating Committee called “a tense period of negotiations” with the Department of Health and Social Care and NHS England — will cover the final two years of the current five-year Community Pharmacy Contractual Framework.

The deal was announced by PSNC chief executive Janet Morrison at an annual LPC Conference in Manchester on Thursday (22 September). Welcoming the attendees, she assured everyone that the committee was well aware of the pressures the sector was facing.

“I heard how contractors are feeling and their frustrations over growing pressure and lack of financial support from the government. They confirmed that many now are unable to deliver the full range of services, and others are struggling to maintain core levels of services. And the ongoing impact of capacity and workforce crisis is critical, leading to temporary closures.

“After very detailed and tough negotiations, we got a write-off of £100 million in excess margin… and this was a hard one and it means that the drug tariff price prices will be relatively higher in the new year, allowing the sector to keep up £100 million that they would otherwise have had to pay back to the government.

“It’s our view at the PSNC that these additional monies will be critical for contractors as we go into a challenging winter period. Losing them by rejecting the deal was not an option, we had to get that £100 million.”

‘Life is being choked out of independent pharmacy businesses’

Reacting to the announcement, the National Pharmacy Association (NPA) said it was “bitterly disappointed and concerned” that the new deal on the final two years of the national contract for community pharmacy in England contained no commitment to “fresh funding”.

It said the £100m write-off “on so-called excess margin goes a small way to recognising the current dire financial circumstances, but a clawback of any amount under this kind of pressure would surely be totally unreasonable.”

NPA vice-chair, Nick Kaye, said: “The life is being choked out of independent pharmacy businesses by the continuation of a fundamentally under-resourced contract in England.

“While the health secretary is busy telling broadcasters that pharmacies can relieve more pressure from GPs, the investment that’s needed to achieve this is nowhere to be seen.

“We can indeed do more to help patients access primary care, but only if the funding matches the level of ambition we all share in the community pharmacy sector.

“We understand why this was a particularly challenging negotiation, but that doesn’t make the reality on the ground for our members any easier to bear.

Kaye’s views were echoed by Dorset-based community pharmacy contractor Mike Hewitson who was categorical in stating that the sector could take up “no new work without a fair funding settlement as it would be unsafe to do so.”

“Just to be clear community pharmacies are working on funding which is 15 per cent less than we did in 2008,” he added.

‘A devastating blow to struggling pharmacies’

A spokesperson for the Association of Independent Multiple Pharmacies called the announcement made by PSNC “a devastating blow” to thousands of community pharmacies that are struggling to survive.

“It is not even a promise that anything will change tomorrow, just a promise of more of the same attrition that has been weakening pharmacies since the start of the five-year deal. The current world situation proves that the ‘five year, no inflation, no contingencies’ deal has been the biggest dis-service ever done to pharmacy and it was done by our own negotiator.

“There also seems to be a complete denial about the failed concessions system which is wreaking havoc with pharmacies cash flow, PSNC assume that pharmacies can survive this even when pharmacy owners are screaming that it is causing huge problems in maintaining the existence of their businesses.

“To cap everything, with a highly business continuity damaging workforce challenges, particularly affecting pharmacists, PSNC have agreed more professional service for pharmacies to carry out without any extra funding. Really?

“This 4-5 year deal is hugely disappointing and de-motivating for all our members and thousands of contractors who have clearly cared too much and given too much and that has perpetuated this disgraceful treatment of them.”

Calls for system-wide review of the pharmacy workforce

The Company Chemists’ Association (CCA) commented: “We recognise the hard work that has been undertaken by the PSNC to reach this agreement. It comes at a time when pharmacies are experiencing unprecedented inflationary pressures, on top of the significant challenges caused by the ongoing workforce crisis.

“We are encouraged by the news that £100m of earned excess margin will be written off, which will ease the financial pressures on pharmacy businesses over the next two years.

“However, we are disappointed that NHSE and DHSC have chosen not to depart from the five-year funding deal, agreed at a time when the current inflationary and workforce pressures could not be envisaged.

“Bearing this in mind, NHS England’s commitment to undertake an independent economic review of community pharmacy businesses, is therefore welcome news. We encourage contractors to engage in this work.

“The NHS must also now endeavour to undertake a system-wide review of the pharmacy workforce, to ensure that patients can access care when and where they need it the most.”

New Pharmacy Contraception Service

The deal also includes the launch of a new Pharmacy Contraception Service (PSC), modest expansions to existing services, a Pharmacy Quality Scheme (PQS) in both years, and an agreement to commission an independent economic review of community pharmacy businesses.

On PSC, Morrison said: “This has been an ambition for community pharmacy for some time, and the service will have a phased launch from 2023 onwards. Like the other eight advanced services, this will be up to contractors whether they wish to deliver it, and to provide the service dependent on whether they meet the requirements set out in the secretary of state’s directions.”

A fee for each consultation for pharmacy contraception service will be £18, while a set-up fee of £900 will be paid in instalments.

Talking about the transitional payments that were originally planned to only last for the first two years of the deal, Morrison said the scheme would now be be extended through the full five years.

“The pot will be expected to go down as service delivery grows, and £70 million of it will be allocated through a fixed payment rather than being related to activity.”

The PSNC has also insisted on a commitment from DHSC to review the implementation of the Price Concession system, which is no longer working from a contractor perspective.

At the conference, Morrison announced that DHSC has committed to “urgently” reviewing the price concession system.

Frustrating evidenced-based bids were rejected

She added: “We know that this deal is not enough for the sector. We put a strong case for a funding uplift… and we put in a fully funded bid for a walk-in service. It’s very frustrating that these evidence-based bids were rejected.”

The PSNC committee members voted overwhelmingly to accept the deal for remaining two years on CPCF in order to guard against the threat of having to pay back an additional £100m in margin to government, to hold on to the other negotiated benefits for contractors, and to maintain an open and constructive dialogue with the new government, the negotiator said in a statement after the announcement.

Morrison told the conference: “As well as this funding help, we are seeking a range of measures to make day-to-day life for pharmacy teams easier. We are also starting collaborative work on a new vision and strategy for the sector and ramping up our wider influencing work to put us in a stronger position ahead of the start of the next CPCF negotiations.

“We must find a way to turn the dial in pharmacy’s favour and to ensure that the vital service we provide to patients and the health service is recognised and valued in our funding settlement.

“The brutal cuts inflicted in the five-year deal have now done untold damage. We look forward to the independent economic review of the sector which, combined with a scaling up of our media and influencing work, will help us to hold policy-makers to account and to show them what we already know: that community pharmacy, if properly funded and supported, can play a vital role in relieving pressure on the NHS, supporting its recovery and delivering better outcomes for patients.”

New and expanded services

The two-year agreement aims to support community pharmacy with “measured and incremental expansion” of clinical services. NHS England will fund new integrated care system (ICS) community pharmacy clinical lead roles to support implementation of all clinical services.

However, due to capacity concerns, NHS will only be introducing services that build on existing ones. Building on progress made in GP referrals via the Community Pharmacist Consultation Service (CPCS) and hospital referrals under the Discharge Medicine Service (DMS), it will facilitate expansion of the Smoking Cessation Service and the DMS, while from March 2023, CPSC will be expanded to enable urgent and emergency care settings to refer patients to a community pharmacist for a consultation for minor illness or urgent medicine supply.

The fee for this service will be the existing CPCS remuneration of £14 per consultation.

If an ongoing pilot were found to be successful, New Medicine Service will be expended, from April 2023, to include antidepressants to enable patients who are newly prescribed an antidepressant to receive extra support from their community pharmacist.

To recognise the valuable skill mix that exists in community pharmacy, the service specifications for the Blood Pressure Check Service and SCS will be amended to also allow delivery by pharmacy technicians. Other services or elements of services which pharmacy technicians can deliver will be reviewed during the remaining two years of the deal. However, there will be no changes made to current fee levels.

Pharmacy Quality Scheme

NHS England will introduce updated PQS in both year 4 and year 5 with annual funding maintained at £75 million. Year 4 PQS will commence on 10 October 2022, aiming to consolidate and build on existing criteria to support the NHS recovery from Covid-19 and wider national health priorities.

“In year 4, the scheme will build on previous criteria around:

  • managing risk (red flags, sepsis and Covid-19 transmission)
  • effective management of respiratory disease
  • antimicrobial stewardship
  • referrals to weight management services

A series of new criteria will be aimed at:

  • supporting those suffering domestic abuse
  • level 3 safeguarding skills
  • improved access to medicines to support palliative and end of life care
  • training on early cancer diagnosis

Year 4 will progress into year 5 and to include a re-audit of the safe use of anticoagulants, and new criteria aiming to increase awareness of the availability of defibrillators and understanding of how they should be used, and to increase working with local systems on health inequalities.

“The commitment by the government and NHS England to an independent economic review ahead of future CPCF negotiations may yet prove to be the most significant part of today’s announcement, because the current method of settling the financials appears to be based on a power imbalance rather than accurately and fairly weighing up evidence.”

‘Policies to squeeze the sector’

PSNC vice chair and member of PSNC’s negotiating team Bharat Patel said: “All members of PSNC remain deeply concerned about pharmacy finances and capacity – and this is why our work continues… We will continue to do everything within our power to demand that government and the NHS support us through the looming economic crisis: pharmacy stepped up to support them in their Covid hour of need, and they must now return that obligation.”

Peter Cattee, another member of PSNC’s negotiating team and managing director of PCT Healthcare, said:  “Inflationary pressures are making costs impossible to control and for many contractors cashflow is now a significant worry. This is exacerbated by the Price Concession issues which we have been pressing DHSC hard to resolve, and which they have now committed to reviewing. Added to all of this, going into these negotiations we knew that over the past two years the sector had earned more than our allowed £800m margin: in effect, a debt to government.

“On top of all the other pressures, a reduction in margin over the next two years just could not have been absorbed and would have put cashflow catastrophically at risk. This is why we had to address this in the CPCF negotiations and we were able to eventually get agreement from Government to write off £100m in margin. This was a critical achievement and means that pharmacies will be allowed to earn £100m more in margin than they would have been over Years 4 and 5.

“But despite the retention of £100m, and our need to accept it, we know this deal is still not enough for contractors – it continues the apparent government and NHS policies to squeeze the sector as hard as they can, and it’s this entrenched approach that we must tackle.

“The independent economic review will help us to do that, but in the shorter-term we need policy-makers to understand that their refusal to uplift the five-year deal has consequences – for our businesses, our patients and local communities. Without a change in approach, the service degradation and disruption that we are already seeing will continue.”

PSNC’s next steps

The pharmacy negotiator said it has already begun urgent work to engage with new government ministers, and that the PSNC is seeking short-term relief measures to help contractors through the coming winter period.

“The government has remained steadfast in its refusal to uplift the five-year deal, so the view of the PSNC Committee is that we must seek monies from outside the CPCF to relieve the strains on contractors’ finances. This was successful during the Covid pandemic, and we are seeking to replicate that approach.”

“We will continue to press for a fully funded Pharmacy First scheme, and to seek wider easements and measures to help pharmacy teams to cope with the current pressures on them.”

PSNC added that during the negotiation it was also keen to avoid any breakdown in relationships with pharmacy’s monopsony purchaser, the NHS.


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