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Maintaining steady cashflow - what do pharmacies need to know?

Covid-19 has affected all of us - but not many realise the impact it has had on the pharmacy sector.

The COVID-19 pandemic has affected all of our lives over the past 18 months in both personal and professional spheres. We have all seen the toll it has taken on NHS services, but many will not realise the effect it has had on the pharmacy sector.

The impending lockdown meant that many people were concerned about access to medication and other pharmaceutical goods, which led to a sudden spike in workloads for pharmacies. In turn, due to the nature of how payments are made to pharmacies in respect of dispensed prescriptions, cash flow was affected.

In March 2020, it was announced by the Government that in order to mitigate cash flow issues caused by the pandemic, an advance payment of £350m would be distributed to pharmacies in England during the period April to June. This was later topped up by a further £20m in July.

There has since been much speculation on how the funds would be reclaimed - and indeed, whether they would be reclaimed at all. The Pharmaceutical Services Negotiating Committee (PSNC) has been lobbying the Government, urging them to write off the payment in order to protect the future of the pharmacy sector. The Government has always said that the funds would need to be paid back, but that there may be a reduction in the amount to be repaid.

The PSNC has now announced that a “much improved” deal has been reached with the Government, which will allow pharmacies in England to claim for certain COVID related costs, such as additional staff costs, making premises COVID secure, and IT costs to enable virtual patient contact. The amount claimed will then offset the amount owed in relation to the advance payment received in 2020.

Pharmacies will have five weeks from 5 July to submit their claims for costs via the NHS Business Services Authority and payments will then be made on 1 October.

At the same time pharmacies will be expected to start repaying the advance payments received in 2020. The exact mechanism of this is still under discussion, but it is looking likely that it will be in six equal monthly sums starting in October.

The deal between PSNC has provided an outline of what the way forward may look like, but still leaves a lot of questions unanswered, especially for pharmacies that may not have the cash flow to deal with the repayments. The PSNC will now begin discussions with the Government regarding year three of the five-year contractual framework and continue their push for an increase in funding for the pharmacy sector, the question is whether it will be too late for those facing financial issues now.

Covid-19 has affected all of us - but not many realise the impact it has had on the pharmacy sector.

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