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Community pharmacy is a critical part of primary care in England, but its role and relationship to the wider NHS is often poorly understood.
This explainer looks at the community pharmacy sector in England, explaining how pharmacies are contracted and funded, the types of services they provide and future trends in the sector.
What is community pharmacy?
Community pharmacy, sometimes called retail pharmacy, makes up one of the four pillars of the primary care system in England, along with general practice, optical services and dentistry. It is arguably most well known as a dispenser and retailer of medicines, but its role is in fact much broader and includes other NHS and publicly funded services. Community pharmacies are a common fixture of many high streets and are also often available in large supermarkets.
The traditional model is a retail outlet that also has qualified health care professionals providing some health care services. Its presence on many high streets makes community pharmacy easily accessible for patients. About 90% of the population in England live within a 20-minute walk of a pharmacy, rising to almost 100% in areas of the highest deprivation, although in rural areas it is only about 20%. A small number operate as online or distance-selling pharmacies.
In recent years, the number of community pharmacies in England has been declining, with 222 closing in 2024. In January 2025, there were around 10,000 community pharmacies in England and around 430 distance-selling pharmacies delivering services under contract for the NHS. About half of community pharmacies are run by pharmacy contractors that operate five or fewer pharmacies (eg, standalone independent pharmacies or small chains). Medium-size groups owning between six and 99 pharmacies make up around 17%. Large pharmacy groups owning more than 100 pharmacies have declined by over a third since 2021 and now hold just less than a third of market share.
Community pharmacy employs a range of staff in its teams, including registered pharmacists, registered pharmacy technicians and pharmacy assistants, alongside managerial and administrative staff.
What is the relationship between the NHS and community pharmacy?
Community pharmacy operates on a contractor model similar to other primary care providers such as general practice. This means community pharmacies are usually independent businesses contracted by the NHS to provide certain services (see below) for local populations.
Community pharmacies are contracted and commissioned in England under the national Community Pharmacy Contractual Framework (CPCF). This sets out the services that need to be provided, how quality is assured and other expectations, such as safety.
The CPCF is negotiated nationally between NHS England, the Department of Health and Social Care and Community Pharmacy England – the pharmacy sector’s representative for the purposes of this negotiation. Since 2023, integrated care boards (ICBs) have had responsibility for commissioning community pharmacy services in local areas using the CPCF.
Every three years local Health and Wellbeing Boards must carry out a pharmaceutical needs assessment for their local area. New pharmacies can only be opened if the ICB agrees they are needed, based on the information from this assessment. (Recent changes to regulations have ended an exemption that meant distance-selling pharmacies could open and also provide services in person without needing to demonstrate local need.)
Who runs community pharmacies?
As part of market entry regulations, community pharmacies can be owned and operated by one of three groups:
sole traders – individual pharmacists who both own and operate community pharmacies.
partnerships – business partnerships of two or more pharmacists that own and operate one or more community pharmacies. In this case, all members of the partnership have to be registered pharmacists by law.
body corporate – registered companies are able to own community pharmacies, but they must employ registered pharmacists to undertake the specific pharmacy responsibilities (ie, providing the services outlined in ‘What services does community pharmacy provide?’). Companies must also employ a superintendent pharmacist to oversee pharmacy activity across their entire business.
All pharmacies must have a responsible pharmacist on site at all times to meet safety, legal and other requirements. Where this is not an owner, it must be another suitably qualified registered pharmacist.
What services does community pharmacy provide?
The community pharmacy contractual framework (CPCF) with the NHS outlines three types of services:
essential services – these are the nationally set, mandatory services that community pharmacies must provide as part of their contract with the NHS if they are to operate providing NHS services. It includes the dispensing of medicines and medical appliances, the disposal of unwanted or spare medicines, advising patients on self-care, providing advice on healthy living and providing medicines support following a hospital discharge.
advanced services – these are optional services that pharmacies can choose to provide. They are nationally set and specified, and the option to provide them is open to all community pharmacies, provided they meet certain minimum requirements. The advanced services currently commissioned through the contract framework include flu vaccination, the New Medicine Service (which aims to help patients understand and make best use of a newly prescribed medicine), blood pressure checking service, smoking cessation service (to help people recently discharged from hospital who quit smoking while in hospital), pharmacy contraception service, and the recently launched Pharmacy First service.
national enhanced services – at present there are currently only two national enhanced services that are commissioned: the Covid-19 vaccination service, and the respiratory syncytial virus (RSV) and pertussis vaccination service. These are nationally agreed services, but they are commissioned locally depending on the population need for the service.
In addition to these nationally determined services, community pharmacies can also be contracted to provide locally commissioned services. Like enhanced services, these are commissioned by public bodies, including integrated care boards and local authorities, to meet the needs of particular local populations outside the nationally set and specified services. Examples of local commissioning from community pharmacies includes sexual health services, substance use services (including needle and syringe exchange services), and smoking cessation services.
Alongside services commissioned by the NHS and other public bodies, community pharmacies may also provide private services – services not commissioned by public bodies – for example, travel health advice and vaccinations.
The Community Pharmacy England website contains additional detail on community pharmacy services commissioned under the CPCF as well as other services.
How is community pharmacy funded?
Community pharmacy is funded through a complex mix of income streams from both NHS and non-NHS sources. The main income streams are:
fees on a per-activity basis for delivering certain core services under their NHS contract, for example dispensing prescriptions
payment for advanced and enhanced services they perform for the NHS under their contract
retained margin – the reimbursement rates that community pharmacies receive from the NHS for prescription medicines are set out in the Drug Tariff, which is published monthly. Pharmacies buy their medicines from wholesalers and manufacturers at the best price they can. For some medicines, any difference between that price and the Drug Tariff can be retained as profit, known as retained margin. The amount of funding the NHS pays the community pharmacy sector through this margin is capped each year. The margin encourages cost-effective purchasing which benefits the NHS, and the Drug Tariff is regularly updated to reflect changes in the market
pharmacy quality scheme (PQS) – community pharmacies can also receive additional NHS payment as part of the PQS, a payment for a national performance scheme that is intended to financially reward pharmacies for delivering quality in the areas of clinical effectiveness, patient safety and patient experience
other NHS payments – this might include participation in the pharmacy access scheme to support continuing access to pharmacies in under-served areas
payment for locally commissioned services from the NHS or local authorities
retail and private services income – many community pharmacies will supplement their NHS income through retail activities, for example stocking and selling over-the-counter medicines, as well as private services.
Although the proportion of NHS and non-NHS income varies between different community pharmacies, NHS income tends to make up the majority of income (usually around 90%), particularly for smaller independent pharmacies.
Future trends in community pharmacy
Like all parts of the health and care system, community pharmacy needs to adapt to meet the changing needs of the population.
Recent trends, reinforced by the NHS 10 Year Health Plan, continue the strategic shift towards a more clinically focused role for community pharmacies, with less emphasis on dispensing and more on providing advice and other support for patients. From 2026, all pharmacists will qualify as independent prescribers, with enhanced clinical, population health and consultation skills. This means that they will be able to deliver more care directly to patients. Pharmacy technician training also now provides a more clinical and patient focus.
Pharmacies will increase the use of technology and automation to make dispensing more efficient, freeing up capacity for clinical services. Community pharmacies will be linked to the NHS's new Single Patient Record, enabling seamless access to patient data and improving co-ordination of care
Community pharmacies will also have a key role to play in the development of a neighbourhood health service, as outlined in the 10-year plan. In April 2025, the outcome of the latest contract negotiations gave community pharmacy the largest uplift in funding across the NHS, almost a 20% increase compared with 2023/2024. The sector remains under financial strain and the government has stated it is working towards a sustainable funding and operational model for community pharmacy.
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