A category M clawback totalling £180m over 12 months will ‘severely’ impact on contractors’ incomes, the Pharmaceutical Services Negotiating Committee (PSNC) has warned.

Category M reimbursement prices will be reduced by £15m per month (roughly equal to 17-18 pence per item on currect Drug Tariff prices) between August 2017 and August 2018, the negotiator announced yesterday (18 July). However, the clawback will hit individual pharmacies differently depending on their dispensing mix, PSNC said.

August's Drug Tariff prices are available here.

The reduction will hit community pharmacy especially hard in light of Government cuts to the sector’s funding, PSNC’s chief executive Sue Sharpe pointed out.

However, it is ‘helpful’ that the clawback – imposed to make up for ‘substantial excess margins’ for 2015/16 and 2016/17 – is to be spread out over a 12-month period, she added.

The excess margin over the two periods was calculated from margins analysis by the Department of Health (DH) and PSNC, which are both based on data from the independent sector. PSNC noted that the exact sum for 2016/17 will ‘not be settled for another few weeks’, but accepted the adjustments proposed.

‘Unanimous’ agreement’

Peter Cattee, chair of PSNC’s funding and contract subcommittee and CEO of PCT Healthcare, said: ‘It is always difficult when the Margins Survey shows that contractors have received more than the allowed margin in any given year.

‘This has particularly been the case in a year in which our businesses have come under a huge amount of pressure as funding has been squeezed. PSNC debated this matter for some time and we felt that the priority was to spread the recovery over as long a period as possible. After much discussion, the Committee agreed unanimously that this proposal from the DH was the best option.’

Sue Sharpe, PSNC chief executive, said: ‘PSNC considered the proposal from the DH very carefully in light of the available Margins Survey analysis, eventually agreeing it unanimously.

‘PSNC scrutinises the DH’s assessments of margin delivery very closely to ensure that the agreed margin is delivered each year. We also monitor price adjustments to ensure they are implemented correctly.

‘Over many years, we have seen that price volatility operates to preclude any real possibility of delivery of the exact agreed sum of margin in year. We also remain concerned about fair access to margin and local manipulation of the market. DH has recognised these issues and agreed to work with PSNC to try to resolve them.’