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The National Pharmacy Association has urged the Government to commission an updated independent economic review of community pharmacy in light of the recent funding settlement for 2024-25 and 2025-26.

The last analysis, commissioned by NHS England and published in March by Frontier Economics and IQVIA three days before the Government and Community Pharmacy England announced the £3.073 billion annual funding deal, made for grim reading.

It revealed the full economic cost of providing NHS pharmaceutical services in England in 2023-24 was £4.397 billion to £5.730 billion, potentially leaving a funding shortfall of £2.7 billion a year.

Considerable gap between funding and cost of providing pharmacy services

The analysis showed around 78 per cent of pharmacies were not sustainable in the short term and 47 per cent were not profitable in their last accounting year according to their earnings before interest, taxes, depreciation and amortisation.

Ninety-nine per cent, or 10,717 pharmacies, had funding which was lower than the full economic cost by £1.642 billion to £2.975 billion.

In a report containing a summary of the original analysis, the NPA called on the Government to “re-run” the economic model “to calculate the impact of the recently agreed uplift in pharmacy funding on the financial sustainability of the sector”.

“The independent economic analysis proved there was a very considerable gap between the funding provided by the NHS and the full economic cost of providing pharmacy services,” said the NPA’s director of corporate affairs Gareth Jones.

“That remains the case even after the uplift contained in the new contract arrangements agreed last month. It is crucial that the Government continues to focus on the need to make the community pharmacy network more sustainable. Having up-to-date numbers on the sustainability of the sector would assist them in this task.”

Pharmacy bodies should “help develop and propose ideas” to reform CPCF

In its report, the NPA also said community pharmacy bodies should “help develop and propose ideas” to reform the community pharmacy contractual framework “alongside the work on substantive reform of the GP contract”.

“NHS England and the DHSC should fully engage all stakeholders in urgent reform of both the pharmacy and GP contracts, with a focus on sustainability, affordability and supporting the government’s strategic shifts and NHS 10-year plan,” the NPA said.

“NHS England should commission further work on which clinical services can be most efficiently delivered from community pharmacy as compared with general practice or the wider NHS.

“(This) was not fully answered by the original analysis, with a focus on the economics of future clinical services and the opportunities created by independent prescribers in community pharmacies in England”.