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The Company Chemists’ Association has said community pharmacies in England should be earning £430 million more in profit on the medicines they dispense and called on Labour to explore a shared margin system across UK. 

With talks between the Government and Community Pharmacy England on the sector’s contractual framework expected to take place imminently, the CCA said its analysis showed the value of retained margin should be at least £1.28 billion instead of the £850 million that was allocated for 2024-25.

The CCA, whose analysis took into account inflation and the volume of dispensing since 2014-15, also said the retained margin per item has fallen by a third in real terms since 2014-15 and is nearly a quarter less than it was five years ago.

The Government agreed to increase the margin by £50 million to £850 million for 2024-25 but the CCA said that increase was “offset by rising dispensing volumes and inflationary pressures”.

“Consequently, despite the uplift, the retained margin per item still declined in real terms,” it said, insisting the Government’s decision to increase the margin by another £50 million to £900 million for 2025-26 still left “a significant shortfall compared to what the retained margin’s actual value ought to be”.

“Additional investment into retained margin would bring greater flexibility to procurement and stock monitoring teams in community pharmacy,” the CCA said.

CCA: Labour should explore shared margin system across UK

It said “depressed Drug Tariff pricing” leads to “avoidable shortages”, leaving the taxpayer to foot the bill for “inflated prices to secure the supply of those medicines”.

“In some cases, the cost of securing the supply of medicines through price concessions far outweighs the savings made from driving down prices in the first place,” the CCA said.

It called on the Department of Health and Social Care to consider a shared margin system across the UK.

“This principle, already in place in Scotland, ensures the benefits of cost savings from effective medicines procurement are shared equally between pharmacies and the NHS,” it said.

“Pharmacies in Scotland are incentivised to continue to source medicines at the best possible value for the taxpayer.

"In instances of ‘over-delivery’, (the) procurement of medicines over and above the capped level of retained margin, additional savings are shared between community pharmacy and Scottish health boards. This allows health boards to reinvest any additional monies back into frontline services.”