Clarification regarding retained margin in 2023/24

Minister Stephen Kinnock recently responded to a Parliamentary Question regarding pharmacy reimbursement. In his response, he stated that pharmacies were allowed to retain £850m medicine margin in the year 2023/24.

The pharmacy funding settlement for 2022/23 and 2023/24 included an uplift to the Drug Tariff, as £100m in excess margin earned by the sector in previous years was written off. This was spread evenly over the two years (i.e. £50m in 2022/23 and £50m in 2023/24).

As such, while the total uplifted margin target for 2023/24 became £850m due to the agreed ‘write off’, it is important to understand that the baseline margin allowance remained at £800m, and as of now, no agreement has been reached between Community Pharmacy England and the Department of Health and Social Care (DHSC) to increase the retained margin allowance beyond £800m per year.

Community Pharmacy England has called for a full review of the medicines supply market to address issues such as under-funding and price concessions, as well as a comprehensive review of medicines margin. The supply chain is now struggling to operate effectively given the UK’s low-price environment, and with margin spread more thinly as dispensing volumes and pricing issues increase, this is further intensifying the intolerable financial pressures on community pharmacies.