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Spring budget 2023 provides no relief for community pharmacy’s funding crisis

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National pharmacy bodies have welcomed two VAT changes related to community pharmacy services announced in the Spring budget on Wednesday (15 March) but were disappointed that the budget brought no further relief for the sector in a crippling funding crisis.

It was announced that from 1 May 2023, VAT exemption on healthcare would be extended to include medical services carried out by staff directly supervised by registered pharmacists.

The government will also extend zero rate on prescriptions to medicines supplied through Patient Group Directions. This measure will be introduced in autumn 2023.

HM Treasury said these measures were being introduced to ensure that the VAT system keeps up with changes to how the NHS operates and how healthcare is delivered across the country.

More widely, Chancellor Jeremy Hunt promised to halve inflation and said that the NHS would soon publish its long-term workforce plan.

However, the pharmacy associations believe that another opportunity has been missed to address the funding crisis in community pharmacy.

They have long argued for these changes, which they believes will support the development of pharmacy services and facilitate skills mix.

NPA chief executive Mark Lyonette said: “The NPA has raised these matters with government on several occasions and we are pleased now to have this positive response.

“These measures don’t touch the sides as far as the massive hole in pharmacy funding is concerned, but we should acknowledge that the government has listened to the sector on these specific VAT matters.

“Although this is a positive signal, it is pennies rather than pounds and another opportunity to fundamentally address the funding crisis in community pharmacy has been missed in this latest Budget.”

Responding to the measures, the Company Chemists’ Association chief executive Malcolm Harrison said: “At the CCA we have been working closely with HMRC and DHSC on a whole host of tax issues for several years now.  We’re delighted that the Chancellor has today announced measures which will place pharmacists on an equal footing with GPs and other prescribers.

“The measures in today’s Budget will ensure alignment in the VAT treatment of both the services provided under the supervision of pharmacists and the medicines supplied by Patient Group Directions (PGDs).

“These measures will boost capacity in pharmacies, and crucially pave the way for the future commissioning of clinical services in community pharmacy.”

CCA hopes that this is the launchpad for further announcements in the upcoming Primary Care Recovery Plan, including a fully-funded Pharmacy First service in England, a no-brainer for patients, primary care and the NHS.

PSNC has this week told the government that it cannot afford any new services in 2023/24, nor a Pharmacy Quality Scheme, and that it must put further funding into the sector through a fully funded Pharmacy First service or via other mechanisms.

The committee believes the most realistic prospect of getting that extra money will be as part of the Government’s imminent Primary Care Recovery Plan and making that happen is PSNC’s primary focus.

Janet Morrison, PSNC chief executive said: “PSNC has been fighting for changes to these VAT rules for many years so it’s great to see this work finally come to fruition. The change to VAT exemption related to the provision of services being supervised by a pharmacist is a critical step if pharmacies are to make headway in making best use of the skill mix that they have, so while small in impact in the context of the current challenges, this is a very welcome development.

“But the bigger picture of the Budget brings no such relief. It’s become depressingly predictable that community pharmacy will be overlooked in the Chancellor’s Budget statements, but never has this been a bigger missed opportunity than today. It’s particularly insulting that some organisations are being given help with energy bills, but not our network of pharmacies.”

The Association of the British Pharmaceutical Industry (ABPI) chief executive Richard Torbett stated that the budget placed the life sciences sector at the heart of the government’s plans for growth.

“The chancellor has announced welcome support for the MHRA. An increase in long-term funding, measures to speed up approvals for new medicines, and a commitment to increase collaboration with global regulators will all support pharmaceutical companies bringing new medicines to UK patients.

“It is also right that the Government wants the most attractive possible environment for investment. Boosting incentives for R&D focused SMEs, alongside the introduction of ‘full expensing’ and a comprehensive R&D tax credit offer, will help achieve this goal for UK life sciences.

“But to further unlock this potential, it is essential that a new Voluntary Scheme is agreed between industry and Government which will help build on the Chancellor’s vision for a globally competitive, high growth UK.”

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