Published: 08/07/19

This circular advises community pharmacy contractors and NHS Boards of the outcome of the negotiations for the community pharmacy funding settlement for 2019-20.

Background

Circular PC(P)(2018) 7 advised on amendments to the reimbursement arrangements and amendments to reimbursement prices listed in Part 7 of the Drug Tariff (generics) along with the Part 7 discount clawback rate for the financial year 2018-19.

A settlement has now been put in place on a 1 year community pharmacy funding package to cover the financial year 2019-20.

Detail

This circular now advises of the key headline elements of the community pharmacy funding package which continues to deliver community pharmacy contractors and Health Boards continued stability and predictability established in previous years settlements. The key headline elements of the 2019-20 settlement are as follows:

1. The remuneration Global Sum will be reset for 201920 at £183.559, an increase of £2.6 million on the previous year.

2. The non-Global Sum shall roll forward at its current level set at £1.3 million.

3. That the Pharmacy First service is integrated with the national Minor Ailment Service from 1 April 2019 and remuneration level set at the existing level of £1.1 million.

4. That the sum of £20 million will be mapped from Part 7 (generic) Drug Tariff to the guaranteed elements of funding in 2019-20. The sum of £20 million will be spread across an agreed basket of targeted drugs. Combined with the Global Sum uplift noted at (I) and Pharmacy First funding noted at (III), and in addition to the £20 million mapped from the Drug Tariff in 2018-19, the total amount of guaranteed remuneration in 2019-20 will be £224.659 million.

5. The guaranteed minimum margin retained by community pharmacy contractors, on the purchase of generic drugs, will be reduced to £80 million in 2019-20.

6. Dependent on market conditions, community pharmacy contractors shall retain 100% of the first £10 million earned above the guaranteed minimum of £80 million – providing pharmacy contractors with the opportunity to earn up to £90 million in retained margin. Margin earned above this amount (£90 million) will be shared on a 50:50 basis with NHS Boards.

7. That margin earned in 2018-19 and subject to 50:50 sharing arrangements will be subject to clawback provisions in 2019-20. Clawback accumulated in 201819 will be circa £18 - £20 million. As such, the generic clawback rate will be applied at the rate of 6% effective from 1 April 2019.

8. The continued inclusion of a cash flow support mechanism to ensure there is sufficient cash liquidity in the pharmacy network, should market conditions deteriorate within the financial year 2019-20, an adjustment or temporary suspension of the generic clawback rate will be made.

9. In the event that support mechanisms are invoked and market conditions recover, the generic clawback rate will be reintroduced at the rate prior to temporary suspension or adjustment. Any outstanding clawback balance at the end of the financial year (2019-20) will be carried forward to the new financial year (2020-21).

Further information on the detailed changes to the Drug Tariff remuneration and reimbursement arrangements will be circulated in due course once finalised with Community Pharmacy Scotland. Drug Tariff Discount Clawback

Circular PCA(P)(2019) 3 advised that the Drug Tariff in respect of the Part 7 and Part 11 discount clawback would be set at 2.5% and 4.51% respectively. This circular now advises that the Part 7 (generic) Drug Tariff discount clawback will be reset to 6% effective from 1 April 2019 and that the Part 11 discount clawback rate will be reset to 4.92% effective from 1 May 2019.