The new community pharmacy funding deal falls short of the costs outlined in the economic review of community pharmacy, but is 'a significant step in the right direction', Community Pharmacy England has said.

Pharmacy minister Stephen Kinnock told press that he recognised the pressures that pharmacy contractors were under and said the government was 'committed to supporting the sector'.

But he stressed that 'reform has to come together with investment'.

The National Pharmacy Association (NPA), which has threatened collective action if the deal is not satisfactory, has said it will have to consider the settlement before recommending next steps.

CPE in 'an almost impossible position'

While both the pharmacy minister and CPE representatives told press that negotiations had been constructive and positive, CPE chief executive Janet Morrison said CPE committee members were 'in an almost impossible position' when the deal was offered.

'On the one hand, this was a settlement offering the highest uplift in the NHS, more than £800 million – a 30% uplift as compared to 2023/24 – in extra funding for pharmacies, supporting core dispensing income and strengthening key services, and which we were able to influence considerably in pharmacy’s favour through the negotiations to help manage resources and improve equity of access to funding.

'On the other hand, this uplift is not enough to fully stabilise the sector as evidenced by the economic analysis.

'What the settlement does do is to take a significant step in the right direction – towards stabilisation, and with recognition and acknowledgement of the funding gap from Government, and their commitment to working towards a sustainable model. This is not the end destination.

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'With these important commitments, which we will hold Government to account for delivering on, Community Pharmacy England decided not to reject, and therefore to risk jeopardising, the injection of more than £800 million into community pharmacies, which will now start flowing to pharmacies through the April Drug Tariff. This is money which businesses desperately need, and quickly.'

She added that in light of the NHS 10-year plan and Government Spending Review currently in progress, 'the decision to continue working with Government, with serious caveats about the remaining funding gap and the future, gives us the best chance of getting a successful outcome from that Spending Review, and for pharmacy’s longer-term future'.

Kinnock: 'Investment must come with reform'

Speaking to press ahead of today's announcement, pharmacy minister Stephen Kinnock said that the deal was intended to begin 'digging ourselves out of this hole' caused by 'a dramatic drop in funding for the sector over the last 14 years'.

'We are committed, of course, to supporting the sector, to getting it back onto an even keel.

'But we're also very clear that with all investment, reform has to come together with investment.

'I think the reforms that we set out in the announcement today will actually help to rebuild the sector without necessarily that being about money, because reforms that improve productivity, drive up efficiency, harness the power of technology, they can actually support and help the sector just as much as funding can,' he said.

He suggested that having the contract in place 'gives us some breathing space' to work with CPE 'to look at what the gaps are, what the needs are, what the reform agenda is.'

'Of course, investment is an important part of that,' the minister said.

'We can't shift care to the community without the pharmacy sector'

He added: 'We are an incredibly tight fiscal environment, so everything that we do in terms of the future of our NHS and the 10 year plan is going to have to be grounded in the reality of the economic picture.

'But that, of course, must also be balanced against the fact that community pharmacy plays an absolutely crucial role in our three shifts from hospital to community, from sickness to prevention, from analog to digital.

'We can't do it without the pharmacy sector, so we're going to have to invest, yes, but we are going to have to reform and drive drive up productivity and efficiency too.'

And he said he hoped the 'stability and certainty' of having a contract in place would help decelerate and decrease pharmacy closures.

'I think a lot of the challenge has been around the massive drop in funding and the lack of stability and certainty. Businesses, above all else, need that stability and certainty. They need to know where they are and where they're placed.'

Speaking about investment in dispensing and clinical services, he added: 'What I think this agreement does is it sends a signal that this government takes community pharmacy really seriously.'

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'I hope that that will send a signal to those pharmacists and the ones who are struggling that there is some light at the end of the tunnel,' he said.

IPA: Majority of uplift will be wiped out by increased costs

The Independent Pharmacies Association (IPA) said in a statement today that it 'welcomed and applauded' the government’s commitment to 'wanting to work in partnership with the community pharmacy sector'.

But it said the funding package 'provides pharmacies with little certainty over their future and will not fully alleviate the immediate fiscal pressures the majority of pharmacies face after years of underfunding'.

'Essentially, the Pharmacy Single Activity Fee (SAF) is the only element in the new contract that adds some cash in contractor’s pockets,' the IPA said.

'However, the majority of this will be wiped by the increase in employer’s National Insurance (NI), Business Rate increases and the rise in National Minimum Wage (NMW) starting from this month,' it warned.

'We hope the recently released Economic Review and its shocking outputs which illustrate the dire financial situation in community pharmacies will be fully taken into account for 2026/2027 community pharmacy contract negotiations. We look forward to working with the Government and NHS officials to take this further and to bridge the funding gap created over the past 10 years,' the IPA added.

NPA: We will consult with members and recomend next steps

Responding to the government's announcement, NPA chair Nick Kaye said pharmacies 'will be relieved to have certainty about their financial position and news of the first increase in their funding for 11 years'.

He added: 'It is good to see a concrete sign that Ministers want to support pharmacies, which have so much potential to achieve the Government’s vision of care closer to communities.

'No-one wants to reduce services through protest action so we’ll look carefully at the detail and consult our members, who are facing substantial cost increases from 1st April, to understand what this means for the future of their services so we can recommend next steps.

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'The Government inherited an intolerable situation after more than a decade of real terms cuts and today's settlement is a step forward. However, the truth is that because of a decade of neglect it also falls a long way short of the NHS’s own estimates of the true cost of providing pharmacy services so we stand ready to work with Ministers to close the funding gap, reform the system and deliver the sustainable, stronger pharmacy service that millions of people need so much.'

CCA: 'Still a significant gap between the cost and funding'

Chief executive of the Company Chemists' Association (CCA) Malcolm Harrison said the CCA was 'encouraged that the Government has committed to increasing the funding for community pharmacy'.

But he said: 'Given the findings of an economic independent review released on Friday, it is clear there is a still a significant gap between the cost of delivering NHS community pharmacy services and what pharmacies will be paid.

'We look forward to working with the Government to find ways to bridge this gap to ensure the future sustainability of the pharmacy network in England.'