The Department of Health and Social Care (DHSC) will reduce Category M prices by £9m per month because it erroneously increased reimbursement prices in July.

Community Pharmacy England (CPE) said that 'based on erroneous calculations' regarding market movements of wholesale prices, in July the DHSC implemented an increase in Category M reimbursement of approximately £21m per quarter.

However, 'based on corrected calculations', it should have instead reduced Category M drug tariff prices by £6m per quarter.

To correct this, drug tariff prices in August and September will be reduced by £9m per month, the equivalent of the total £27m per quarter extra reimbursement set out in July's drug tariff.

And between October 2024 and March 2025, the extra £27m delivered in July will be clawed back.

CPE chief executive Janet Morrison said the negotiator had warned that a mid-quarter adjustment and reduction in reimbursement was 'not an acceptable resolution to the situation', but had been overruled by DHSC.

'Community pharmacy businesses are in a perilous and critical state due to the entrenched underfunding of the Contractual Framework,' she said.

'Community Pharmacy England’s firm position remains that the margin element of the CPCF, along with the overall funding quantum, needs urgent uplift as it is insufficient to reflect the ever increasing volume of dispensing and services provided by the sector.

'Any more reductions to funding are likely to exacerbate the stream of pharmacy closures we are seeing across the country, and put patient access to pharmaceutical services at risk.'

Meanwhile, National Pharmacy Association (NPA) chair, Nick Kaye, called the announcement 'infuriating'.

'It’s outrageous that pharmacy finances can be tossed about in this careless way by the Department of Health,' he said.

'When financial margins are already very tight, a clawback of this amount could worsen cashflow problems for independent pharmacies and risks further cutbacks and closures.

'This infuriating announcement goes to show why the NPA has already called a second day of protests, in September, calling for fair funding.

'The new government must urgently address our sector’s overall funding crisis and reform this up-down payment system, which toys with the finances of a critical healthcare service.'

And Malcolm Harrison, chief executive of the Company Chemists' Association (CCA), said that 'at a time when finances for community pharmacy are exceptionally tight, further clawbacks will only serve to place additional strain on pharmacies’ cashflow'.

He added: 'The cycle of adjustments and clawbacks demonstrates the need to urgently review the system of retained margin.

'The level of retained margin available to pharmacies, for procuring medicines for the NHS has not been increased since 2014, despite a decade of increases to both the volume and cost of prescribed medicines.'

DHSC has been approached for comment.