Category M prices are set to increase from August.

Category M reimbursement prices will increase by £15 million a month from August 2019 while the single activity fee (SAF) will increase to £1.27, the Pharmaceutical Services Negotiating Committee (PSNC) has announced. This is to correct a predicted shortfall in the margin delivery rate for the current financial year and it will be reviewed again in the autumn. The increase will help to ensure that the overall amount of margin delivered in the 2019/20 financial year equals the agreed annual sum of £800million.

The SAF 1p increase is to guarantee delivery of the correct amount of funding to contractors this year.

Category M prices did increase by £10million a month in April 2019, however, the April reimbursement levels were lower than predicted.  This was likely caused by movement in the drug mix in April, which means that contractors would have not seen the positive cash flow impact that would have been expected.

Due to the margin recovery process affecting contractors’ cashflow, the PSNC is concerned about the resulting financial position many contractors find themselves in. These concerns have been forwarded to the Department of Health and Social Care (DHSC) and the PSNC will continue to work with them to try to smooth the delivery of margin to contractors in the future.

Simon Dukes, PSNC Chief Executive, said: “The past few months have been incredibly difficult for many community pharmacy contractors. These August price increases are being made to try to correct margin delivery for this financial year and this should bring some relief for contractors.”