COVID-19: Pharmacy funding announcements
01 Apr 2020
Cash advance payments
The Department of Health and Social Care (DHSC) has agreed to grant pharmacy contractors in England a ‘cash advance’ of £300million from 2020/21 funding, in recognition of significant cashflow pressures being experienced by community pharmacies due to the COVID-19 pandemic.
It is important to note that this is not additional funding. The global sum for 2020/21 remains at £2.52 billion and PSNC is currently trying to negotiate an uplift to overall funding as a result of COVID-19.
When pharmacies will receive the cash advance
The £300 million cash advance will be split across April and May 2020:
• £200 million on 1 April 2020 – this will give the average pharmacy contractor an uplift in their April payment of around 26%
• £100 million on 1 May 2020 – giving an average uplift of around 13% on the May payment
The payments will be made automatically to contractors as part of their April and May payments from the NHSBSA. However, they will not show on the FP34 Schedule of payment; contractors will instead receive a letter from the NHSBSA detailing the amount of their uplift.
How much pharmacies will receive
For an average pharmacy dispensing 7200 items a month with no additional services, a 26% uplift equates to approximately £16,000, while 13% equates to approximately £8,000. These are estimated figures calculated using average volumes and average item values [AIV] only ; they will vary from pharmacy to pharmacy.
How the payments will help pharmacies
These additional one-off payments are in recognition of the fact that the normal monthly payments made to contractors are based on advance payments and balancing payments for earlier months when dispensing volumes had not been impacted by COVID-19. For example, the 1 April payments are based on advance payments for February and balancing payments from January. Because of the massively increased wholesaler bills that contractors have incurred in March owing to increased volumes of dispensing due COVID-19, it is likely that, without the uplift, the April payments would not have been sufficient for the contractors to meet their increased costs.
The following diagram illustrates this in more detail. The red text denotes where there will be a shortfall in income due to increased dispensing volumes (and potentially AIV depending on item mix) in March. This increase would normally not be accounted for until 1 June (as denoted by the green text).
||Advance Payment For
||Balancing Payment For
||February number of items
||January actual items dispensed
||March number of items
||February actual items dispensed
||April number of items
||March actual items dispensed
This additional funding should help pharmacies to pay their increased wholesaler bills until their cashflow corrects in June. No detail has been given yet as to how these payments have been calculated, nor how they will be reconciled within the financial year. It is hoped that any increase in dispensing volumes should be accounted (and paid for) in the overall funding for 2020/2021. The NPA will be making representations to PSNC in this regard and to ensure that this is being addressed in their ongoing negotiations with DHSC.
Payment for physical barriers to help enforce social distancing
On the 31 March 2020 a letter from Dr Keith Ridge (Chief Pharmaceutical Officer for England) announced a payment of £300 to all pharmacies and dispensing doctors (excluding distance selling pharmacies). This payment is not related to the cash advance and will be paid to help pharmacies to install physical barriers such as retractable tape barriers and screens to help the enforcement of social distancing in pharmacies.
The Welsh and UK Governments announced a support package in excess on £1.4bn for small, Wales based businesses to provide support during the coronavirus outbreak. The funding in this package includes a grant scheme and Business Rate Relief, further details can be found here.
The Welsh Government also announced a one off increase in advance payments to community pharmacies, the value of the additional payment will be in the region of £50m. Further details about this advanced payment, including how costs will be recovered can be found here.
In Northern Ireland, given the demands being faced by the service and the need to maintain service continuity, a special advance of £35m has been agreed.
The Department of Health in Northern Ireland announced that £10.5m is being paid with the February prescriptions, i.e., the March payment, to alleviate pharmacy pressures. This also includes an additional funding linked to COVID-19 response measures, such as modifications to premises for protection including Perspex screens/hatches/adjusted entrances, stock cleaning and PPE, as well as staff pressures such as staff doing overtime or covering the hire of new staff.
Some of this funding (£4m) is to go towards business continuity including the provision of daily Situation Reports to the Health Board and clustering arrangements.
A further £25m will be paid in April 2021
In Scotland, the pharmacy negotiating body Community Pharmacy Scotland are awaiting response from Scottish Government to their call for a sum to be paid to the pharmacy network for additional costs due to the pressures in light of the COVID-19 crisis.
Pressures include increased pharmacy staffing, costs in relation to health and safety issues, infrastructure management, the increased volume and increased cost of medicine procurement, and the increased demand for medicine deliveries to patients in self-isolation.
To bring quick funding into the Scottish pharmacy network to support these costs, CPS have agreed with Scottish Government that pharmacy advance payments paid at the end of April will be set at three times the net value for each pharmacy paid at the end of December.