Pharmacies under-funded and at risk of closure, shows new research

04 Sep 2020

● New report reveals future of community pharmacies under threat
● Research by EY (formerly Ernst and Young) shows three-quarters will be losing more than 40 thousand pounds a year by 2024
● Community pharmacies in England face funding gap of half a billion pounds

Nearly three-quarters of family-owned pharmacies in England could be forced to shut their doors over the next four years according to a damning new report from Ernst and Young.

The study found that pharmacies are under-funded to the tune of £497m – with 72 percent forecast to be loss-making within four years if the current contractual arrangements carry on unchanged. The report estimates that the average pharmacy will be making an annual loss of £43k by 2024.

Having undertaken a detailed economic analysis of the sector’s finances, EY concluded that, without intervention from NHS England, many pharmacies will be unable to survive – limiting access to health services in many areas including remote rural communities.

EY is calling on policy makers to put in place safeguards against the English community pharmacy network collapsing as an unintended consequence of short-term cost savings.

Funding has been dropping in real terms for four years, and is set to carry on this path for a further four years under current arrangements.

The findings come just weeks after Secretary of State for Health Matt Hancock told an online National Pharmacy Association (NPA) conference that he is against widespread closures and wants more investment in pharmacy services.

EY advises that continued underfunding is a barrier to meeting NHS England’s strategic aim of delivering more clinical services from community pharmacy, to free up capacity elsewhere in the healthcare system.

Andrew Lane, NPA Chair, said:

“This report from EY shows the precarious situation facing pharmacies up and down the country. Community pharmacies act as a vital lifeline in communities across the land – and there’s a very real threat they could close unless ministers act now. Health Secretary Matt Hancock describes community pharmacy as a critical part of the NHS family. He has also said that, if the Government asks pharmacies to offer more services, they need to be paid properly for those services. Those words urgently need to be backed by further investment to underpin viability, change and improvement in our sector.”

Chair of the All-Party Pharmacy Group, Jackie Doyle-Price MP, said:

“Pharmacies are at a crossroads – and must be given the funding they need to look after the nation’s health. The pandemic has highlighted what a pivotal role they played and continue to play in delivering frontline care when many doctor surgeries were closed. Going forward if the NHS is to deliver a truly 24-hour seven day a week service, then pharmacies must be at the forefront of that.”

EY’s health economics director, George Agathangelou, said:

 “Our research shows that many more pharmacies will become loss-making over the coming years if the current funding arrangements in England continue. This is clearly unsustainable and requires urgent attention to help pharmacies maintain and develop vital services.”

The EY report was commissioned by the NPA and drew on financial research conducted among NPA members. The NPA Board will be meeting on 7 and 8 September to give detailed consideration to EY’s findings.

To read the report in full click here.


Watch on demand

On Friday 4 September, the NPA  invited NPA members, stakeholders and members of the press to join us for a free webinar..

During this webinar we presented the findings from an important piece of research carried out by EY on behalf of the NPA, sharing an understanding of the impact of the current financial arrangements on pharmacy’s ability to deliver the aspirations of the NHS.

You can now watch this webinar on demand, simply use the following link to register a few simple details to access the recording; click here.