Home National Contract Funding
The funding for the national NHS community pharmacy contractual framework is re-negotiated on an annual basis. The total funding, including pre-registration grants, agreed for England for 2009/10 was £2,318m.
Available funding for 2009/10 could be characterised in three ways: central funding, funding recharged to PCTs and retained buying profit. Central funding consisted of the Global Sum covering Item Fees, Establishment Payments, the Repeat Dispensing Annual Payment, Transitional Payments and Additional Fees. Funding recharged to PCTs covered 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. In 2010/11 central funding (the Global Sum) was devolved to Primary Care Trusts. For information on this devolvement 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 established and maintains a comprehensive evidence base to support contract funding. The initial cost inquiry was undertaken in July 2003, using a statistically representative sample of pharmacies. In addition to the cost 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 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 is now underway and will inform funding from 2010/11.
What are the current funding levels?
Total pharmacy contractor funding increased to £2,318m for the period 2009/10.
The table below provides a summary of the funding for 2009/10 (England):
| £ | |
| Fees and Allowances | £1,760m |
| Agreed Buying profit | £500m |
|
*Excess Buying profit earned |
£40m |
| Pre-Registration training | £18m |
| Total | £2,318m |
*Using the results of the joint PSNC/DH margin survey, it has been estimated that there was an excess of £40m purchase profit earned against target levels in the first half of 2009/10. This figure has been used in considering funding levels for the second half of the year but is provisional pending the outcome of the 2009/10 retained buying profit survey.
An excess of £270m purchase margin was identified. It was agreed that £125m of excess purchase profit would be retained by community pharmacy for the provision of one-off infrastructure costs, including preparing for EPS Release 2, Information Governance, and business continuity planning, to sustain the effective delivery of community pharmacy services. An additional £65m of excess purchase profit will remain on account. The remaining £80m will be treates as excess.
Click on the link below for a summary of the changes to the funding arrangements in October 2009.
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 April 2010 arrangements) (PDF)
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:
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Funding for Essential Services Including Establishment Payments, Practice Payments, Transitional Payments, the Repeat Dispensing Annual Payment and Fees |
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Including MUR limits |
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Drug Tariff Category M: How it Works |
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ETP Allowances |
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Pre-registration Training Grant |
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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: |
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.
Topical issues linked to funding
Click on the links below for more information on current issues linked to pharmacy funding:
Recent distribution changes by UK Medicine Suppliers