A £15 million increase in Category M reimbursement prices each month from August 2018 is "very positive" news, and is the result of starting to develop closer working relationships with the DHSC, the Pharmaceutical Services Negotiating Committee (PSNC) has said. 

DHSC has agreed to cease the £15 million per month reduction in prices that had been in place to recover estimated excess margin delivered to pharmacies in 2015/16 and 2016/17, which will help contractors in England struggling with cash flow issues.

PSNC director of pharmacy funding Mike Dent said: "The decision to cease margin recovery in the short-term in light of PSNC’s representations about contractors’ cash flow is very positive and reflective of the collaborative relationship that we are trying to rebuild with the DHSC.

"PSNC will be working, through the negotiations on funding and in discussions with the Department, to get the best possible deal for contractors and to ensure that any future mechanisms to correct margin delivery are as manageable as possible in terms of cash flow.”

The decision to cease the Category M price reductions to recover margin now was a result of negotiations in which PSNC raised concerns about the impact of price reductions on contractors’ cash flow, said the body.

Further excess margin earned in 2016/17 will, however, need to be recovered at a later date, said PSNC.