Guidance

Community Pharmacy Contractual Framework 5-year deal: year 5 (2023 to 2024) update for contractors

Updated 12 May 2023

12 May 2023

Dear community pharmacy contractors,

We write to update you on the agreement for both year 4 and year 5 of the Community Pharmacy Contractual Framework (CPCF) 2019 to 2024 5-year deal between the Pharmaceutical Services Negotiating Committee (PSNC), the Department of Health and Social Care (DHSC) and NHS England (NHSE).

Firstly, we would like to thank all pharmacy contractors for their continued work and support. In September 2022, we wrote to you to set out the agreement for years 4 and 5 of the 5-year deal. The 2-year agreement aims to support measured and incremental expansion in clinical service provision from community pharmacies. Alongside this, recognising the pressures facing the sector and the importance of these services to the health system, NHSE provided a modest and non-recurrent additional investment of £100 million across years 4 and 5 to support contractors. We remain committed to not seeking to introduce any further clinical services beyond those agreed last September from within the current funding envelope (£2.592 billion).

Delivery plan for recovering access to primary care

On 9 May, the Delivery plan for recovering access to primary care was published. As part of this plan, a further investment of up to £645 million over 2 years was announced. This is to expand the role of community pharmacy by supporting 7 further common conditions and also expanding the pharmacy oral contraception and blood pressure services. The negotiations between PSNC, DHSC and NHSE on how we implement the delivery plan have started and we will update pharmacy contractors in due course.

New and expanded services

On 24 April, Tier 1 of the NHS Pharmacy Contraception Service was launched. This new service enables community pharmacists to provide ongoing management, via a patient group direction (PGD), of routine oral contraception that was initiated in general practice or by a sexual health clinic.

On 15 May 2023, the Community Pharmacist Consultation Service will be expanded to enable urgent and emergency care settings to refer patients to a community pharmacist for a consultation for minor illness or urgent medicine supply.

The pilot to expand the New Medicines Service (NMS) to include antidepressants is underway and a further update on the expansion of the existing service will be provided in due course.

We remain committed to the 4 October 2023 launch date, to introduce Tier 2 of the NHS Pharmacy Contraception Service, subject to a positive evaluation of the pilot. This will enable community pharmacists to also initiate oral contraception, via a PGD, and provide ongoing clinical checks and annual reviews.

From 1 April 2023, to recognise the valuable skill mix that exists in community pharmacy, the service specifications for the Blood Pressure Check Service and Smoking Cessation Service have been amended to also allow delivery by pharmacy technicians. Other services or elements of services that may be deliverable by pharmacy technicians will continue to be reviewed.

Following the announcement in the Spring Budget 2023 about forthcoming changes to extend the VAT exemption for healthcare to include services carried out by staff directly supervised by registered pharmacy professionals, we will review service specifications to enable delivery by non-registered staff under supervision.

Year 5 Pharmacy Quality Scheme (PQS) 2023 to 2024

NHSE has introduced a reduced Pharmacy Quality Scheme (PQS) in year 5 from 1 June 2023. The reduced scheme is valued at £45 million to retain key priorities from the NHS Long Term Plan while reducing the burden on pharmacy contractors.

Year 5 gateway and quality criteria

Gateway criteria:

15 NMSs between 1 April 2023 and the end of 31 December 2023.

Quality criteria:

• reducing harm from anticoagulants – re-audit and implementation of learnings and recommendations from 2021 to 2022 audit
• palliative and end-of-life care – as per year 4 requirements
• respiratory – as per year 4 requirements
• antimicrobial stewardship – as per year 3 and year 4 requirements plus advice on safe disposal of unused or expired antibiotics

Funding

The transitional payment was set at £0 in February 2023. The monthly payment of a flat fee started in April 2023 to all pharmacy contractors who dispense at least 101 items a month up to a national total of £70 million on an annual basis. This amount is subject to change if clinical service volumes grow beyond our forecasts and all unallocated funding is spent on new services. The monthly payment is currently £533.

VAT

As announced in the Spring Budget 2023, the government will legislate by Statutory Instrument to extend the VAT exemption for healthcare to include services carried out by staff directly supervised by registered pharmacists in the UK. The changes came into effect on 1 May 2023.

As announced in the Spring Budget 2023, the government will extend the zero rate of VAT on prescriptions to medicines supplied through PGDs. This measure will be introduced in autumn 2023.

Further to clarification from HMRC that VAT is not applicable on products supplied in accordance with serious shortage protocols (SSPs), the allowance for VAT currently paid alongside product reimbursement from 1 June 2023 will stop being paid when reimbursing for products supplied in accordance with SSPs.

Concessionary price review

Following the review of the concessionary price process, from April 2023 products granted a concessionary price are classified as ‘discount not deducted’ (DND) for the month(s) they are on concession. Furthermore, for products requested after the 23rd of the month, the concessionary price granted can be rolled over to the following month. We are continuing to work with PSNC on how a ‘retrospective increased payment’ may apply, when appropriate.

Reimbursement reforms

Discount deduction arrangements

The transition to the new discount deduction arrangements is progressing but we will continue to monitor the implementation. While the intent is to rely on the margin survey to adjust for any increased or decreased delivery of margin, we may need to consider other adjustments, for example applying a tolerance level where adjustments to discount rates need to be applied, to reduce the impact on margin delivery.

Category A

Following feedback from PSNC on DHSC’s proposals to base the reimbursement prices of generic medicines in category A on market sales and volumes data, we are looking to implement this in summer 2023.

Remainder of proposals

DHSC remains committed to continuing to work with PSNC on the remainder of the proposals set out in the reimbursement reforms consultation response.

Original pack dispensing and medicines containing sodium valproate

Following the publication of the consultation response on Original pack dispensing and medicines containing sodium valproate, DHSC will progress the amendments to the Human Medicines Regulations 2012. In line with this we will need to work with PSNC firstly to accommodate full pack dispensing and reimbursement of sodium valproate prescriptions and then how original pack dispensing will be enabled and reimbursed as part of community pharmacies’ NHS pharmaceutical service provision.

Medicine margin

As part of the delivery of the additional investment into funding of the Community Pharmacy Contractual Framework during years 4 and 5, category M reimbursement prices have received an upward adjustment since October 2022, with the aim of delivering the agreed £100 million by October 2023.

The results of the medicine margin survey have shown an over-delivery of medicine margin up to April 2022. Alongside the additional £100 million, category M reimbursement prices have been adjusted on a quarterly basis to recoup this over-delivery which is projected to have finished by April 2024.

Regulatory changes

Several regulatory amendments have been laid before Parliament that will come into effect on 25 May 2023. The amendments include provisions to:

• make it easier for pharmacies to change when they deliver core opening hours so that they can incorporate staff rest breaks for up to an hour
• temporarily enable co-ordinated closures via a ‘local hours plan’ in areas where patients are experiencing significant difficulty accessing pharmaceutical services
• require contractors to implement certain minimum business continuity arrangements should the pharmacy be unable to open
• allow contractors who entered the Pharmaceutical List on a 100 hours exemption to reduce core hours to a minimum of 72 hours so long as all pre-existing hours between 5pm and 9pm Monday to Saturday, total number of Sunday hours and hours between 11am and 4pm on Sundays are maintained

Further minor amendments have also been included in the amended regulations.

Easements

In addition to a reduced PQS, NHSE has confirmed that it will not set a national audit, nor require a practice based audit in 2023 to 2024. During 2023 to 2024, we will consider the removal of the requirement for a practice-based audit permanently and review the need for practice-based leaflets, considering how or whether to modernise this requirement. DHSC and NHSE will also continue our current work with PSNC on what more can be done to relieve the current pressures contractors are facing.

Yours sincerely,

Alette Addison, Deputy Director, Pharmacy, Dental and Optical, Department of Health and Social Care

Ali Sparke, Director, Dentistry, Community Pharmacy and Optometry, NHS England