Home National Contract Funding
The funding for the national NHS community pharmacy contractual framework is re-negotiated on an annual basis. The total funding agreed for England for 2011/12 was £2,526m.
Available funding for 2011/12 could be characterised in two ways: funding recharged to PCTs and retained buying margin. Funding recharged to PCTs now consists of the old Global Sum elements covering Item Fees, Establishment Payments, the Repeat Dispensing Annual Payment, Transitional Payments and Additional Fees. It also includes Practice Payments including a contribution for provision of auxiliary aids for people eligible under the Disability Discrimination Act 1995 (DDA), payments for the Advanced services and IT payments.
For information on the devolvement in 2010/11 of the Global Sum to Primary Care Trusts please click here.
For brief guides to pharmacy funding and economics, click on the links below:
PSNC's brief guide to community pharmacy economics
PSNC's brief guide to community pharmacy funding
How is the funding calculated?
PSNC has established and maintains a comprehensive evidence base to support contract funding. The initial Cost of Service Inquiry was undertaken in July 2003, using a statistically representative sample of pharmacies. In addition to the Cost of Service Inquiry, detailed modelling was undertaken of the new services to ensure they were fully costed. Leading consultants were used to assess the return on investment community pharmacies needed. Costs and returns are based on independent pharmacies.
Each year, adjustments to the funding arrangements are negotiated to maintain the value of the contract. This is done using the agreed 'formula for future years'. Click on the link below for more information on both the original Cost of Service Inquiry and on the annual funding uplifts:
The Calculation of Contract Funding
In 2009 PSNC and the Department of Health agreed it was necessary to undertake a new joint Cost of Service Inquiry. This joint Cost of Service Inquiry report was published in July 2011. Initial views of the results were reflected in the 2010/11 funding settlement and the report will form the evidence base for negotiations for future funding.
What are the current funding levels?
Total pharmacy contractor funding increased to £2,526m for the period 2011/12.
This includes adjustments to Category M and fees and allowances details of which can be found by clicking on the link below in the summary of the changes to the funding arrangements in October 2011.
You can also click here to see a chronological summary of key funding changes which have affected pharmacy contractor's payments.
Indicative Income Tables
Indicative Income Tables (based on December 2011 arrangements) (PDF)
Indicative Income Tables (based on October 2011 arrangements) (PDF)
Indicative Income Tables (based on April 2011 arrangements) (PDF)
Indicative Income Tables (based on October 2010 arrangements) (PDF)
Indicative Income Tables (based on April 2010 arrangements) (PDF) (Updated to incorporate 2010/11 funding settlement)
Indicative Income Tables (based on October 2009 arrangements) (PDF)
Indicative Income Tables (based on April 2009 arrangements) (PDF)
Indicative Income Tables (based on October 2008 arrangements) (PDF)
Indicative Income Tables (based on January 2008 arrangements) (PDF)
Indicative Income Tables (based on October 2007 arrangements) (PDF)
NB: As the funding arrangements change mid-year, these Indicative Income Tables illustrate Indicative Income at a particular point in the year.
How is the Funding Distributed? Payment, Fees and Allowances
Click on the links below for more information on the various sources of funding:
 |
Funding for Essential Services Including Establishment Payments, Practice Payments, Transitional Payments, the Repeat Dispensing Annual Payment and Fees |
 |
Including MUR limits and latest information for New Medicine Service targets |
 |
Drug Tariff Category M: How it Works |
 |
ETP Allowances |
 |
Pre-registration Training Grant |
 |
PSNC negotiated a number of measures to support pharmacies that are dispensing low volumes of prescriptions. In addition there have been changes made to the ESPS Scheme: |
Frequently Asked Questions
How does PSNC ensure the agreed funding is delivered?
Overall funding is monitored at a national level by PSNC to ensure that all income due to community pharmacy has been paid out.
As part of the Contract funding arrangements, it was agreed that £500m would remain in retained purchase margin through generics and other purchases. As discussed above, PSNC is continuing to work closely with the DH to monitor and ensure the availability of the guaranteed £500m purchase profit. This is measured and monitored using regular margin surveys into the actual purchase prices paid by independent pharmacy contractors. This monitoring is vital to ensure that this source of funding is and continues to be available.
Why is the £500m NHS pharmacy funding delivered through purchase profit income not increasing?
When the contract was introduced in 2005/6, the total funding agreed for the year was £1,766m. The total funding agreed for 2011/12 was £2,526m. Each year the total funding for pharmacies has increased. More information on the annual uplift formula can be found by clicking here.
This funding is delivered through a mix of fees, allowances and guaranteed purchase profit. The value delivered via guaranteed purchase profit (£500m per annum) has remained the same since 2005/6 but as the total funding has increased each year, this means that the proportion of funding delivered through purchase profit as opposed to fees/allowances has reduced. This has been a policy decision.
Topical issues linked to funding
Click on the links below for more information on current issues linked to pharmacy funding: