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, often on a walk-in basis, makes community pharmacy easily accessible for patients and provides a ready source of advice and support around their medicines, for minor acute illnesses, or for ongoing long-term conditions. A small minority operate as online or distance-selling pharmacies that don’t typically provide face-to-face services but deliver their service obligations in other ways.
As of the end of March 2019, there were more than 11,500 community pharmacies in England delivering services under contract for the NHS. Of these, about 40 per cent were run by pharmacy contractors that operate five or fewer pharmacies (eg, standalone independent pharmacies or small chains) and about 60 per cent were run by contractors operating six or more pharmacies (for example, large corporate pharmacy chains).
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 and NHS Improvement, the Department of Health and Social Care and the Pharmaceutical Services Negotiating Committee (PSNC) – the pharmacy sector’s representative for the purposes of this negotiation. In the past, this agreement was typically done on an annual basis, however, there has been a recent move to a multi-year agreement to help fulfil the ambitions of the NHS Long Term Plan.
NHS England and NHS Improvement then has responsibility for commissioning community pharmacy services in local areas using the CPCF. Usually, this means local NHS England pharmacy contract teams monitoring contracts with their local community pharmacies with support from a central national pharmacy commissioning team to help ensure consistency.
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 need 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 with the NHS (CPCF) outlines three types of services:1
- 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), and the recently developed Community Pharmacist Consultation Service (which allows certain other parts of the health system to refer patients to community pharmacy for some urgent care needs like emergency medicines supply and as well as for some minor illness needs)
- enhanced services – these are optional services such as anticoagulation services that used to be commissioned by primary care trusts. Since the abolition of primary care trusts, only NHS England can commission enhanced services. At present this route is not often used as most areas use locally commissioned services to commission these types of optional services (see below).
In addition to these nationally determined services, community pharmacies can also be contracted to provide locally commissioned services2 – like enhanced services, these are commissioned by public bodies, including clinical commissioning groups (CCGs) or 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, needle and syringe exchange services, or smoking cessation services.
Alongside services commissioned by the NHS and other public bodies they may also provide private services – services not commissioned by public bodies, eg, travel health advice.
The PSNC website contains additional detail on community pharmacy services commissioned under the CPCF as well as other services.
- 1. In response to the Covid-19 pandemic, essential and advanced service requirements were amended to facilitate additional support of patients by community pharmacy, including the commissioning of a Pandemic Delivery Service.
- 2. The term locally commissioned services is sometimes also used in a way that encompasses enhanced services.
How is community pharmacy funded?
Community pharmacy is funded through a complex mix of income streams.3 The Drug Tariff sets out the remuneration and reimbursement that pharmacies can expect from the NHS as part of their contract work under the CPCF.4 On top of this, many will receive additional income from both NHS and non-NHS sources. Key incomes streams include:
- fees – community pharmacies get paid a fee on a per-activity basis for delivering certain core services under their NHS contract, eg, dispensing prescriptions
- payment for advanced and enhanced services – community pharmacies receive payment for the advanced and enhanced services they perform for the NHS under their contract
- payment for other commissioned services – community pharmacies also receive payments for other contracted work they perform, for example as part of locally commissioned services. Unlike most of the other payments listed here, which come from NHS England funding, these are usually paid for by the body that commissioned the service, such as a local authority or CCG.
- retained margin – the reimbursement rates that community pharmacies receive from the NHS for prescription medicines are set out in the Drug Tariff. 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 for 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 – pharmacies will also receive other NHS payments. This includes participation in the pharmacy access scheme to support continuing access to pharmacies in under-served areas or transition payments to support pharmacies with ongoing innovation
- retail and private services income – many community pharmacies will supplement their NHS income through retail activities – eg, stocking and selling over-the-counter medicines – as well as for 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, particularly for smaller independent pharmacies.
- 3. Many payment streams to community pharmacy made by NHS England are administered on their behalf by the NHS Business Services Authority. See: https://www.nhsbsa.nhs.uk/nhs-prescription-services
- 4. Certain payments, including Establishment Payment, have been omitted from this explainer as they have either been phased out or are due to be in the near future.
Future trends in community pharmacy
In response to NHS Long Term Plan, a five year version of the Community Pharmacy Contractual Framework for 2019–24 has been agreed.
This new framework sets the direction for community pharmacy as one that is increasingly clinically focused, with less emphasis on dispensing and more on providing advice and other support for patients in the community setting. In particular, to help generate additional capacity in the sector for this work, the new framework expects community pharmacies to increase the use of technology and automation to make dispensing more efficient.
Community pharmacies are also expected to be key partners in emerging primary care networks. Primary care networks now have access to funding to increase the number of clinical pharmacists working in general practice, which may offer opportunity for developing further relationships and communication between general practice and community pharmacy. Note that while some staff may work in both settings part time or at different points in their career, community pharmacists and the new clinical pharmacists in general practice are distinct roles – they operate in different settings and deliver separate, though often related, services to help meet patient needs.
A lot of the issue with a lack of understanding of what community pharmacies actually ARE creates a lot of problems. Patients don't understand the arm's-length relationship between GPs and community pharmacies, for example, and generally hold the pharmacy responsible for a GP practice's failure properly to prescribe medication. This is becoming worse at the moment with GPs narrowing the acceptable mechanisms for repeat medication requests because of the COVID-19 situation and often passing the responsibility for communicating their unwillingness to engage in the "old" ways to the frontline staff in the pharmacies -- who DO have to engage with patients in person.
There is often also an unwillingness on the part of GPs to engage with another role of the community pharmacist -- to assess prescribed medication for clinical safety. The pharmacist and lead technicians have a legal responsibility for this but too many GPs take these attempts to observe clinical safety as an affront to their prescribing skills.
The constant erosion of funding for community pharmacy -- in terms of what they are paid for what they do -- is what is driving a move towards charging for previously free delivery services, away from free provision of monitored dosing systems and blister packs and, at the leaner end of the market, is driving smaller pharmacies out of business. Even the mechanism for electronic delivery of prescriptions has mostly benefited GP practices at a direct cost to community pharmacy. This is not a relationship that is working very well any more, sadly.