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The five-year deal brings certainty, change and opportunity

Following the joint announcement by the PSNC and DHSC of its five-year deal on the Community Pharmacy Contractual Framework, we have courted views of a wide range of clients and operators. The overriding response has been to welcome the certainty that the five-year deal brings mixed with concern as to the change in funding allocations within the guaranteed financial envelope.

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Whilst certainty is a good thing, the fixing of the funding at the current £2.592 billion for each year for the next five years will inevitably result in further pressure on those who don’t work with the changes being implemented in the drive to a more service led contract. As it stands, if considered in line with performance of the Retail Price Index (RPI) over the last five years, in real terms the funding will shrink by circa 4-5% over the deal period.

The key, however, is not to focus on the global funding sum but more to the opportunities this brings to those who are able to embrace and indeed make the necessary changes. The removal of the Establishment Payment and MURs over the next two years enables the savings made by the DHSC to be recycled into newly proposed services, some of which are yet to be agreed/implemented. The introduction of monthly Transitional payments from October, based on dispensing volumes, will help contractors prepare for the more service-based roles that pharmacy is expected to play in support of the wider NHS plan.

Add to this the introduction of the new NHS Community Pharmacy Consultation Service (CPCS), pharmacy can, and will, take a more active role in supporting patients with minor ailments.

The focus on collaboration through PCNs and the evolution of the Quality Payment Scheme to the new Pharmacy Quality Scheme all clearly underpin the message that the pharmacy market must adapt to protect both income and profits. The clear signposting of the drive to technology-based dispensing models to deliver this transition will be well received by those who have already invested in this area, whilst those who haven’t will need to look to collaborate in understanding how they can move toward this. The recognition that current legislation will need to adapt to allow this will be welcome news but, as always, the devil will be in the detail.

From a market point of view, the removal of Establishment Payments next year is no surprise having been clearly signposted in October 2016 in the Department’s Final Package document. Whilst in the short term, this will further squeeze operator cashflows for those with lower dispensing activity volumes, those who move with the change and adapt in line with the five-year plan should be able to offset some of this with the new service provisions highlighted. 

Certainty always helps to drive confidence and as both operators and purchasers familiarise themselves with the opportunity the new contract provides, we are confident that appetite will not only remain but will increase over the course of the five-year plan.

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