A rise in pharmacy closures means that NHS England (NHSE) have been unable to recoup £15.7 million in COVID support payments.
As a result of the global pandemic, NHSE issued £370 million in emergency funding to community pharmacies across the UK, between March and June 2020.
Cash Flow Difficulties for UK Pharmacies
Pharmacies across the UK often run into short-term cash flow difficulties, due to the timeframe in which they are reimbursed for purchased medicine (typically about 90 days) versus their monthly needs to purchase additional stock.
To remediate this funding gap, the government issues advanced payments to pharmacies to help ensure that they’re able to keep their doors open for customers.
However, the nature of the COVID pandemic beast led to the government directing NHSE to provide urgent support for pharmacies.
Within the NHS Commission Board’s Annual Report, it is highlighted that: “At the start of the COVID-19 pandemic community pharmacies faced significant and unexpected cash flow pressures.
“These were caused by several issues, including a sharp increase in prescription items in March and April 2020, higher drug prices, delayed payments for the Pharmacy Quality Scheme and extra COVID-19 related costs.
“The government decided and agreed to provide an urgent uplift to the normal advance payments to support pharmacies with their cash flow pressures and to help them stay open to continue to provide vital NHS pharmaceutical services.”
Such cash advances had been awarded to pharmacies on the proviso that the payments would be recovered across 2021/2022.
As operating conditions worsened for businesses in the subsequent months and years following the issuance of financial support, the number of pharmacies to permanently shut up shop increased significantly.
Resulting from this, nearly £16 million in financial support will not find its way back to NHSE.
Should COVID Support Loans be Written Off for Pharmacies?
In May 2021, the National Pharmacy Association heaped pressure on the government to write off the £370 million support to the sector.
Similarly, the Association of Independent Multiple Pharmacies (AIMP) had also called for the government to absorb the cost of COVID support, citing an alleged NHS underspend of billions that could be used to foot the bill.
More recently, the government launched an analysis of the current financial situation of pharmacy contractors.
Alongside the Pharmaceutical Services Negotiating Committee (PSNC), the two bodies will work on the analysis of the financial sustainability of pharmacies in the UK.
This comes at a pivotal time for the sector, as Janet Morrison, the Chief Executive of PSNC is reported to have said that the organisation have “been telling the government and the NHS loudly and clearly that pharmacies are no longer economically sustainable”.
Small businesses access unsecured, fast funding from Got Capital. As an alternative lender, Got Capital offers financing solutions specifically designed for and catered to the needs of SMEs.
