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The Government has increased funding for community pharmacies in England by £617 million to £3.073 billion for 2025-26 and pledged to write off the sector's debt and continue financing Pharmacy First following the latest round of contractual negotiations.

The new funding package, which sees an extra £106 million go towards 2024-25 compared with the previous year and another £375 million for 2025-26, compares with £2.592 billion a year pharmacies across the country were operating to over the course of the five-year contract that ran from 2019-20 to 2023-24. 

The Government billed the latest deal as a “record investment” in the sector, although it is significantly short of the money required to bridge the funding gap as highlighted in the independent economic analysis of community pharmacy that was published on Friday.

Government is committed to stabilising the pharmacy sector

That analysis, commissioned by NHS England, said the full economic cost of providing NHS pharmaceutical services in England in 2023-24 was £4.397 billion to £5.730 billion.

Nonetheless, Community Pharmacy England was upbeat about the new funding deal which it insisted demonstrated “the Government’s commitment to stabilising the sector”.

Labour promised to invest a further £215 million in Pharmacy First and other primary care recovery plan services and write off £193 million of debt to give community pharmacy owners “confidence going into the new financial year on April 1”.

The Government also said “a further £30 million has been freed up by devolving funding for blood pressure and contraception services to pharmacies”.

“In total, the 2025-26 uplift represents a 15 per cent increase in government spending on the previous year, higher than the record 5.8 per cent growth in the total NHS budget,” the Department of Health and Social Care said.

SIngle activity fee will increase

The single activity fee will increase by 19p to £1.46 per item from April 1 and community pharmacy’s margin allowance will rise to £900 million a year.

Community Pharmacy England said “a new intermediary band” of £500 for 20 to 29 consultations will be introduced for monthly Pharmacy First payments and antidepressants will be added to the new medicine service (NMS).

In October, the contraception service will include emergency hormonal contraception. There will be a £7 fee increase for the pharmacy contraception service to £25.

CPE said “a smaller than usual” pharmacy quality scheme worth £30 million for 2025-26 will “include training to support the expansion of these services, with a 75 per cent aspiration payment available to claim in May”.

The agreement also contains regulatory provisions such as stopping distance-selling pharmacies from providing advanced and enhanced services to patients on pharmacy premises. NMS subcontracting will also be stopped.

CPE chief: New deal is ‘significant step in the right direction’

CPE chief executive Janet Morrison conceded the funding increase was “not enough to fully stabilise the sector as evidenced by the economic analysis” but insisted it was “a significant step in the right direction”.

“This is not the end destination,” she said. “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.

“(This) will now start flowing to pharmacies through the April Drug Tariff. This is money which businesses desperately need, and quickly.”