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Pharmacy minister Stephen Kinnock has told P3pharmacy he hopes the new 2025-26 Community Pharmacy Contractual Framework will be enough to end the sector-wide problem of loss-making dispensing within the next 12 months. 

In a press briefing yesterday (March 30) to discuss the implications of the agreement reached by Community Pharmacy England and the Government, the health minister was asked whether the measures announced this morning would be sufficient to ensure no pharmacies are losing money on NHS medicines by the time the one-year deal lapses in April 2026. 

“That is certainly our hope,” Mr Kinnock told P3pharmacy. “We want to get to a position where contractors feel that they have a fair deal that’s delivering the best possible value for money but is also giving the stability and line of sight they need in order to plan.” 

He said he wanted the new terms – which include boosting the allowed annual medicine margin by 12.5 per cent to £900m – to help pharmacies “maximise their ability to compete and provide the best possible services to patients”.

In addition to increasing the allowed annual medicine margin and raising the single activity fee by 20p to £1.47 from April 2025, the 2025-26 contract sets out provisions to explore “further strategies to stabilise Category M” and consider ways in which the price setting arrangements for Category M and Category C medicines reimbursement can be ‘sped up’ or otherwise modified.

Pharmacies across England have warned for the past several years that they lose money on many of the drugs they dispense, with inadequate reimbursement from the NHS forcing some contractors to finance their drugs bills with their personal savings.

Alette Addison, deputy director for pharmacy, eye care and controlled drugs at the Department of Health and Social Care, told P3pharmacy: “There is a range, a package of work that we’ve committed to work with CPE on to see if we can actually improve the reimbursement system.”

“When we talk about dispensing at a loss, [that] happens because possibly there’s not enough margin in the system.

“This deal puts £900m into margin, so we’ve increased it by £100m on the five-year deal.

“And the work we’ll also do to improve the system should help, and puts a little more cushioning, as it were, between the prices pharmacies pay and the prices they’re reimbursed.” 

Community Pharmacy England chief executive Janet Morrison told P3pharmacy that a “huge amount” of work will be devoted to reviewing distribution and reimbursement, including tackling branded generic prescribing. 

“We will be working very hard with the Department, and we’ll also hold their feet to the fire in terms of making sure those commitments are followed through,” Ms Morrison added.