DHSC to remove Transitional Payments from February

The Department of Health and Social Care (DHSC) has decided to reduce the Transitional Payment to zero from February 2023.

PSNC’s Negotiating Team refused to accept this on the grounds that any reductions in payments at this point will be impossible for community pharmacy contractors to manage financially.

We are also continuing to be clear with officials and Ministers that CPCF funding needs an urgent uplift to help businesses to cope with soaring costs being driven by inflation and the workforce crisis. We put a comprehensive business case to the Government for this uplift in the last CPCF negotiations.

The latest Transitional Payments decision by the Department follows the announcement last year that the value of the Transitional Payments would be phased down over the second half of 2022/23 and is based on the latest monitoring and analysis of funding delivery.

PSNC is continuing to argue with Government and the NHS that the current funding levels are not now adequate to cover the costs of the NHS services that pharmacies are providing.

We submitted a fully costed bid for a Pharmacy First service in our last round of negotiations alongside the case for an uplift to core CPCF funding. Both of these were refused.

Janet Morrison, PSNC Chief Executive, said:

“The Department’s removal of the Transitional Payments could not come at a worse time for community pharmacy businesses who by the Government’s own admission have been subjected to years of funding cuts. Pharmacies are on the brink of collapse and removing these payments now may be the final straw for some: we have made that absolutely clear.

While we know how constrained public funding is, this spreadsheet balancing act has real world costs in terms of businesses, livelihoods, jobs, healthcare and community resources. We will keep making that case in the strongest terms: the public and NHS rely heavily on pharmacies and we are the solution to many of the health service’s current problems, but all of this will be lost if we are squeezed to the point of collapse. The #saveourpharmacies campaign which we and the other national pharmacy bodies have launched will be critical in reinforcing all of this.”

Peter Cattee, Chair of PSNC’s Funding and Contract Subcommittee and a Negotiating Team Member, said:

“The Government’s refusal to move away from the five-year deal given our current situation – one that is not of our making nor could have been foreseen as inflation and cost of living crisis bite, and our workforce is decimated, largely by NHS decisions – is a policy choice that is going to be catastrophic for some pharmacies and ultimately for patients. Contractors now have little control over their own businesses and we must continue to take whatever action is within our power to change Government minds and that decision before we see chaos in the network.”

Background Information

The reduction in Transitional Payments was deemed necessary by the DHSC as the ‘unallocated’ funding that made up the Transitional Payments reduced for two main reasons:

  • New services have been introduced into the CPCF and their uptake has accelerated, using up the unallocated CPCF funding; and
  • A new flat payment will be introduced in 2023/24, funded from the unallocated CPCF funding.

The phasing down of Transitional Payments began in October, and carried on in November and December.

The Department’s decision is based on the latest monitoring and analysis of funding delivery.

NHSBSA Website: Drug Tariff Part VIA – Transitional Payments

FAQs on Transitional Payments

Discover how we are working to improve the outlook for community pharmacy at an event near you.

Click Here