Pharmacy funding
Published on: 12th September 2014 | Updated on: 7th April 2025
Funding for 2024/25 and 2025/26
In March 2025, Community Pharmacy England, NHS England and the Department of Health and Social Care agreed a settlement for community pharmacies, securing core funding of £2.698bn and £3.073b in 2024/25 and 2025/26 respectively. In addition to this, there is additional increased funding for the Pharmacy First service (introduced at the end of 2023/24), as well as a write off of historic margin over delivered to the sector. The resources linked below contain detailed information for pharmacy owners on the settlement.
2024/25 and 2025/26 CPCF settlement section
Joint letter to pharmacy owners
Briefing 010/25: Funding Settlement for 2024/25 and 2025/26
Infographic: CPCF Settlement 2024/25 and 2025/26
Animation: Summary of Pharmacy Funding Settlement for 2024/25 and 2025/26
Pharmacy funding under the national framework is distributed in two ways: i) fees and allowances, and ii) retained buying margin.
Fees and allowances
‘Fees and allowances’ refers to the payment pharmacies receive for the provision of pharmaceutical services, also commonly referred to as ‘Remuneration’. All fees and allowances are recharged to NHS England. These consist of the ‘global sum’ elements covering Single Activity Fees, Item Fees and Establishment Payments.
National fees and allowances payments can be further categorised in two ways, i) payment for Essential Services, and ii) payment for Advanced Services. Essential Services are services which all community pharmacy contractors must provide, Advanced Services may be provided if the contractor chooses to provide them.
For information on the fees and allowances pharmacies are paid under the terms of the national contract please click the following links.
Retained buying margin
‘Retained buying margin’ is the profit community pharmacies are allowed to retain through the cost effective purchasing of prescription items. The national arrangements allow for £900m to be delivered to community pharmacies annually in retained buying margin. The government use Category M in the Drug Tariff to calibrate the amount of margin available in the market.
For information on Category M please click here.
Margins Survey
Part of the agreement is that pharmacy margin levels will be monitored and adjusted with the aim of delivery a specific level of margin to community pharmacy each year. This section contains information on how the Margins Survey is conducted.
Economic Analysis of NHS Pharmaceutical Services
NHS England commissioned an independent economic analysis of NHS pharmaceutical services, to be carried out with Community Pharmacy England and pharmacy owners.
The Independent Economic Review – also referred to as an Economic Analysis of Community Pharmacy – was agreed as part of the Community Pharmacy Contractual Framework (CPCF) arrangements for 2022/23 and 2023/24 and followed the significant concerns Community Pharmacy England raised about the economic sustainability of the sector both through the CPCF Annual Review process and in subsequent negotiations.
Cost of Service Inquiry
The 2010 COSI commissioned by DH and PwC was intended to form the evidence base for negotiations for future funding. This section contains information on the COSI.
For more information on this topic please email funding.team@cpe.org.uk
