Further supplementary written evidence from Community Pharmacy England (PHA0073)

 

Medicines supply and shortages

Medicine supply issues are regularly one of the top pressures cited by pharmacies in our quarterly sector polling. We know that this is impacting on patients on a daily basis. Key areas we have recently seen shortages are in medications for diabetes, epilepsy and ADHD.

Many people are now having to visit many pharmacies to try and find a supply of medicines where there are shortages, and some have questioned why pharmacies cannot publish live stock levels to help them with this. Whilst we have every sympathy with patients’ frustration supply issues can be deeply worrying for them – pharmacies order thousands of lines of drugs and on average receive 4-6 deliveries a day. From hour to hour pharmacies cannot predict whether they will be able to secure in-demand medicines. They do not therefore have live stock systems that patients could access to help them source their medications. Introducing such a system would be near impossible given the complexities of the supply chain, and likely prohibitively expensive.

When a pharmacy does not have a medicine in stock, they may have to refer the patient back to the prescriber for an alternative medicine to be prescribed.

It would help pharmacies to better meet the needs of patients when stocks are in short supply if they were allowed the flexibility to substitute alternatives eg. different formulations, or generics for branded products. We believe this could help alleviate shortages, get better outcomes for patients and reduce pressure on General Practice. It would also put pharmacists working in community pharmacies in England on the same footing as their counterparts in hospital dispensaries, and in Scotland and other countries.

 

 

Medicines pricing and margin

A core part of community pharmacy funding is delivered through retained margin – this margin has been set at £800 million for many years. Where pharmacies make additional margin, this is taken back from them in later months and years, reducing the amount of funding available to them in those future periods regardless of activity. Recently, the recovery of margin retained during the pandemic, combined with the inexorable rise in prescribing, has meant that remaining margin has been spread more thinly than ever.

As well putting huge financial pressure on pharmacies, this has contributed to the reduction in resilience in the market to withstand spikes in demand and other shocks to medicine supply. We have seen an increase in price concessions in 2023 there was an


average of 149 concessions per month; these were running at about 50 per month in 2020/21, and in 2012/13 there was an average of only 8 per month.

It may also have resulted in pharmacies changing their ordering behaviour, such as ordering higher than previous volumes of medicines in order to insulate their patients against shortages.

The low prices of medicines has also made the UK a less attractive market for manufacturers and this is further contributing to the reduction in resilience. We think that instead of focusing on driving down prices, the Government should instead carry out a review of the medicine supply chain to ensure medicine safety and resilience.

We believe that the margin element of the Contractual Framework needs urgent review. Pharmacies have been in a ‘pay back’ situation since 2021 and clearly, given the partial write-offs that the Government has had to concede recently, the system is not working as it needs to.

The margin allowance, alongside the Single Activity Payment (per script fee), are the main sources of core running costs for pharmacies and earning less due to recovery is therefore eating into the financial sustainability of many pharmacies.

It is likely to be costing the Government more in time spent trying to measure and recover monies spent than is delivering value to the public purse.

 

 

Reform of the Community Pharmacy Contractual Framework

It is hard to distinguish to what extent the funding problems for the community pharmacy sector could be solved by a significant increase to the global sum (the funding available). While this would undoubtedly help materially, we likely also need to look at some key elements in the funding formula to ensure that drivers and incentives are right, and also that an ongoing inflationary increase mechanism is built in.

Similarly, it is difficult to tease apart the factors causing pressures: the 30% real terms cut in the overall contract sum combined with the increase in volume of activity (dispensing volume and clinical services) are both playing a critical part.

In our submission to Government ahead of the 2024/25 negotiations we estimated that an increase in the overall CPCF of £1.2bn would be needed to safeguard current dispensing and clinical services and access for all patients, including those in most need.

As indicated above, as well as seeking the funding uplift needed to cover pharmacies’ costs, we are reviewing all elements of the current Contractual Framework (the CPCF). On margin, we are looking at both incremental reforms and how to improve the Margin Survey alongside more fundamental alternative funding mechanisms. On funding mechanisms, we are commissioning further work to look at alternative funding mechanisms. Currently, unlike General Practice, pharmacies receive no funding contributions to cover their premises, systema and workplace costs.


We have set out some key principles that any future funding system needs to deliver:

-          Sustainability to enable pharmacies to plan for the future and invest in their businesses and teams – for example in facilities, automation and robotics

-          Indexation to allow for both volume increases and inflation

-          Incentives and benefit sharing

-          Risk reduction through avoidance of caps and clawback, and unpaid services

-          Simplicity, transparency and predictability

We are anxious to take forwards these discussions with both DHSC and NHSE – based upon a shared understanding of the ambitions for development of clinical services in the future and a common understanding of the real costs of service delivery.

We are also keen that in future, Government fulfils their commitments as part of the Contractual Framework agreement. We are still waiting on the promised ‘efficiencies’ set out in the 2019 CPCF: Hub and Spoke, Supervision and skill mix and Original Pack Dispensing; which were supposed to offset some of the efficiencies being demanded from pharmacies.

 

 

Potential challenges for Pharmacy First

It has been brilliant to see how positively community pharmacies have responded to the new Pharmacy First service, with 98% of community pharmacies now signed up to the service. We hope that newly launched NHS England marketing campaign will further support public awareness and behaviour change, but we note that this marketing support will need to go well beyond the initial planned campaigns for the first year.

We will be supporting NHS England’s independently commissioned evaluation of the service – which we understand will look at quality, public satisfaction and matters such as antimicrobial resistance, though we remain confident in pharmacist’s ability to manage the latter based on their previous work in this area and existing data.

We will monitoring uptake and delivery on an ongoing basis with a particular focus on:


Potential further development of Pharmacy First/other clinical services

With the right investment and support, there is huge potential for community pharmacies to do more to support the deliver of public health, prevention and clinical services. This was set out in some detail by Nuffield Trust and The King’s Fund in their Vision for Community Pharmacy published last year.

As set out in this vision, we want to build on Pharmacy First to develop pharmacies’ role in health and wellbeing and tackling inequalities, as well as long-term condition management and medicine optimisation, enabling pharmacies to play a more integrated role in primary care.

In particular, in the future, we would like to see pharmacies fully supported and fairly commissioned to:

All of this would need to be underpinned by continued development of IT/digital interoperability, alongside appropriate investment and support.

 

 

Wider regulatory reforms that would help to ease pressure and improve flexibility

As above, we need Government to fulfil their commitments as part of the Contractual Framework agreement. We are still waiting on the promised ‘efficiencies’ set out in the 2019 CPCF including:

These changes were supposed to offset some of the efficiencies being demanded from pharmacies.

As outlined above, we also want to see the introduction of substitution powers for pharmacists in community pharmacy to help to manage medicines supply for patients.


A direction of travel shifting away from use of PGDs and Serious Shortage Protocols and towards more use of Independent Prescribers in the pharmacy setting could also help to reduce administrative burdens on pharmacies. And we want to see pharmacies being given more flexibilities to amend their opening hours, including to allow for protected learning time.

 

Feb 2024