Community Pharmacy Contractual Framework: financial year 2026 to 2027
Published 29 May 2026
Applies to England
© Crown copyright 2026
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Dear community pharmacy contractors,
We are writing to update you on the agreement reached between the Department of Health and Social Care (DHSC), NHS England and Community Pharmacy England (CPE) on the Community Pharmacy Contractual Framework (CPCF) for the financial year 2026 to 2027.
Total funding for the CPCF will be £3.636 billion in 2026 to 2027, representing an increase of £340 million compared to 2025 to 2026. This includes the integration of the Pharmacy First budget into the CPCF budget, guaranteeing this funding stream to the pharmacy sector for the future.
The funding uplift for 2026 to 2027 has been prioritised to improve income stability and support the core supply function of community pharmacy. The single activity fee (SAF) will increase from £1.46 to £1.52, while other clinical service fees will be held at current levels to prioritise this uplift. Alongside this, retained medicine margin will increase by £200 million to £1.1 billion and up to £239 million of historic net over-delivery will be written off. This will provide greater certainty for contractors and support the continued supply of medicines to patients. These changes are complemented by targeted regulatory flexibilities, including allowing pharmacy closures for training and streamlining administrative requirements, to support more efficient delivery and reduce operational burden.
Building on the 19.7% uplift to the CPCF across 2024 to 2025 and 2025 to 2026, the pharmacy budget will grow a further 10.3% in 2026 to 2027 compared to 2025 to 2026. However, we recognise that there is more to do to ensure the sustainability and resilience of the community pharmacy network, and to ensure that patients receive the best possible care and support. Ministers have been clear on their commitment to continue to work jointly with CPE on delivering reforms to achieve these objectives and recognise the importance of this commitment to CPE’s support for the settlement.
Community pharmacies continue to deliver for patients, demonstrating the vital role of the sector. Between April 2025 and January 2026, over 2.75 million Pharmacy First clinical pathways consultations were delivered, alongside nearly one million pharmacy contraception service consultations and 3 million hypertension case-finding service consultations, as well as dispensing around one billion prescription items to patients in the same 10-month period.
In the financial year 2026 to 2027, the sector will once again receive one of the largest budget uplifts across the NHS, reflecting the government’s recognition of pharmacy contractors’ contribution to patient care, support for the wider NHS and role in delivering the neighbourhood health service.
CPCF funding changes
As outlined above, CPCF and Pharmacy First funding will increase from £3.296 billion in 2025 to 2026 to £3.636 billion in the financial year of 2026 to 2027. We will also write off up to £239 million of historic net contract over-delivery against the historic settlements.
Table 1: changes to available funding, 2025 to 2026 to 2026 to 2027
| 2025 to 2026 | 2026 to 2027 | |
|---|---|---|
| CPCF (£ billion) | 3.073 | 3.636 |
| Pharmacy First (£ million) | 215 | Included in CPCF |
| Digital developments (£ million) | 8 | Included in CPCF |
| Total available (£ billion) | 3.296 | 3.636 |
| Funding growth (£ million) (%) | - | 340 (10.3%) |
The following changes have been agreed for the financial year 2026 to 2027.
Single activity fee
The SAF will increase from £1.46 to £1.52 (4.1%). This uplift will be backdated to take effect from May 2026, with early advanced payments from June to swiftly benefit contractors.
Clinical service and other non-SAF fees
All other fees will be maintained at the 2025 to 2026 level to prioritise the uplift in SAF.
Claim windows
The one‑month claim window for Pharmacy First clinical pathways and the New Medicine Service (NMS) will be retained. However, a new late claims process will be introduced for these services to allow submissions up to 2 months after the window closes, recognising the operational pressures on contractors.
Capping
Existing mechanisms
Pharmacy First clinical pathway cap arrangements will be maintained in the financial year 2026 to 2027. For those contractors delivering independent prescribing (IP) clinical pathway consultations, there will be an additional allowance made to each capping band to support the increased delivery we anticipate through this expansion to the service.
For the NMS, the existing cap methodology will be retained but contractor caps will be adjusted down to 0.9% of monthly prescriptions. This change will be reflected in the drug tariff to apply to activity conducted in June 2026.
New mechanisms
We have agreed to implement high level caps for the hypertension case-finding service and Pharmacy First minor illness service to restrict highest volume outliers, with details to be agreed and implemented during the year.
Medicine margin
Medicine margin has been a central focus of this year’s settlement, reflecting its importance in underpinning the supply of medicines and providing greater certainty for contractors. The value of retained medicine margin will increase by £200 million to £1.1 billion for financial year 2026 to 2027.
Further, DHSC and NHS England have also considered the concerns raised by CPE during consultation about the impact of historic over‑delivery and the pressures this creates for contractors managing procurement and supply. In response, £219 million of confirmed historic margin over‑delivery up to the end of Q2 of 2025 to 2026 (30 September 2025) will be written off (£166 million net of historic fee under‑delivery). A further write‑off of up to £73 million will apply to Q3 and Q4 of 2025 to 2026, subject to the results of the margin survey. In addition, no price adjustments will be made in 2026 to 2027 to recover any remaining over‑delivery from 2025 to 2026 after these write‑offs.
Taken together, these measures are intended to improve stability and predictability in the medicine margin system and support the continued supply of medicines to patients. We recognise that concerns remain, including around the distribution of medicine margin across the supply chain, and we will continue to work with CPE to explore these issues.
An upward adjustment of £20 million was made to Category M generic reimbursement prices in April 2026. Further quarterly adjustments will be made in the usual way in light of the results of the medicine margin survey, with the aim of delivering £1.1 billion in medicine margin during the financial year 2026 to 2027, with no recouping of any over-delivery above the agreed write-off levels during this financial year as set out above.
Work will continue on the concerns regarding cash flow and the distribution of medicine margin (including the use of branded generics) across the pharmacy network.
Independent prescribing
From autumn 2026, a national NHS IP offer will be introduced as an extension of Pharmacy First and the pharmacy contraception service. This will include:
- prescribing within existing Pharmacy First clinical pathways and the pharmacy contraception service
- up to 5 new prescribing‑only pathways subject to assessment by a clinical reference group
- appropriate circumstances for prescription management
The initial introduction of IP during 2026 to 2027 will be funded through 3 main streams:
- a one-off £500 set‑up fee payable once a contractor has signed up to deliver the relevant services and has a confirmed go-live date with an assured electronic prescribing service (EPS) system provider
- a £525 monthly infrastructure fee
- consultation fees:
- consultations delivered under the new pathways will be paid the same item of service fee as other Pharmacy First clinical pathways and minor illness consultations at £17
- consultation fees for prescribing consultations within existing pathways will align with those received for a patient group direction consultation - £17 for Pharmacy First clinical pathways, £25 for an initiation or ongoing contraception consultation and £20 for an emergency hormonal contraception consultation
The Pharmacy First fixed payment arrangements for clinical pathways will be maintained, with new IP clinical pathway consultations counting towards fixed payment thresholds. Fixed payments will remain at £500 for contractors delivering 20 to 29 consultations in a month and £1,000 for those delivering 30 consultations or more.
The Pharmacy First budget will be fully merged into the CPCF budget, guaranteeing the funding envelope to the sector and removing the previous risk of underspending.
Pharmacy Quality Scheme
A revised Pharmacy Quality Scheme (PQS) will be introduced for 2026 to 2027 with a value of £20 million, with the following elements:
- renewal of the palliative and end of life care criterion, moving it to a gateway requirement and introducing a short survey to be co-designed with CPE
- a clinical audit and peer discussion to be agreed with CPE - this will support the rollout of IP and the increased clinical complexity of other services for pharmacy professionals, embedding appropriate reflective practice as a significant tool to develop and expand clinical competence
- a criterion requiring pharmacists to complete unit 4 of the Centre for Pharmacy Postgraduate Education (CPPE) e-learning course on fundamentals of respiratory therapeutics and pass the asthma (2026) e-assessment - this will demonstrate that they have updated their knowledge in line with the new guideline on Asthma: diagnosis, monitoring and chronic asthma management developed jointly by the British Thoracic Society, the National Institute for Health and Care Excellence (NICE) and the Scottish Intercollegiate Guidelines Network
- a criterion requiring pharmacy contractors to update standard operating procedures to provide guidance on the safe management of urgent repeat medicines, including time-critical medicines and controlled drugs
- separately, the sepsis training incentivised as a criterion in previous schemes has been superseded by NEWS2 training as the most appropriate training tool to align with best practice. This will be included in the Pharmacy First service specification as recommended training but will not form part of the 2026 to 2027 PQS
We have agreed that the scheme will commence in June 2026. We will increase the aspiration payment from 75% to 80% for the financial year 2026 to 2027, with the claim window being opened in July 2026. The aspiration payment will be made on 1 September 2026.
Pharmacy Access Scheme
The Pharmacy Access Scheme (PhAS) will be retained with funding capped at £20 million for the financial year 2026 to 2027. We also commit to reviewing the scheme with a view to implementing updates from 2027 to 2028. The PhAS in England is awarded automatically based on national geospatial, prescription and eligibility metrics. Pharmacy contractors do not need to apply. Eligibility is calculated nationally, with monthly payments distributed automatically alongside regular reconciliation payments.
Regulatory changes
The following changes will be progressed from autumn 2026:
- enabling pharmacies to close for up to 4 hours in a day up to once a month for learning and development purposes
- technical amendments to dispute resolution and market entry processes - this will include making contractor co-operation a prerequisite for the commissioner’s obligation to undertake or continue dispute resolution
- moving Disclosure and Barring Service (DBS) checks from the PQS into the terms of service
- regulatory changes that will apply to IP pharmacies conducting NHS clinical services, including using an approved EPS system
We will continue to work together to explore possible actions that may help protect pharmacy staff from violence and abuse and further reduce the inappropriate management of EPS nominations.
Health campaigns and clinical audit
A maximum of 2 national health campaigns and 2 local campaigns led by integrated care boards will be required in 2026 to 2027. There will be no national clinical audit requirement in 2026 to 2027, other than the one required as part of PQS.
Future reform
Community Pharmacy England and the government have committed to work jointly on a programme of reform that recognises the significant challenges facing the sector and ensures we have a pharmacy network that is fit for the future.
Conclusion
Thank you for the contribution you continue to make to patient care. The government is committed to working with the pharmacy sector to build on the progress made to date by:
- stabilising community pharmacy so patients can reliably access the medicines they need
- introducing IP to enable pharmacists to use their clinical skills and provide quicker access to treatment for common conditions
- developing a sustainable long‑term model for the sector
Community pharmacy has a vital role in supporting patients and the wider NHS, and in delivering the government’s 10 Year Health Plan to make the NHS fit for the future.
Yours sincerely
Peter Lilford, Deputy Director, Pharmacy, Eyecare and Controlled Drugs, Department of Health and Social Care
Janet Morrison OBE, Chief Executive, Community Pharmacy England
Ali Sparke, Director, Dentistry, Community Pharmacy and Optometry, NHS England