This debate will be opened by Shivani Raja MP.

Funding for the community pharmacy sector in England is set out in the Community Pharmacy Contractual Framework (CPCF). The CPCF an agreement between the Department for Health and Social Care (DHSC), NHS England, and Community Pharmacy England (CPE). CPE is the representative body for all community pharmacy owners in England.

The CPCF, and pharmacy funding more widely is complex and detailed. This briefing provides an overview of the funding arrangements for 2026/27, and those in recent years.

More detailed information on the CPCF, pharmacy funding and issues affecting the community pharmacy sector in England are available in a Library briefing on Community pharmacy in England.

2019/20 to 2023/24 funding deal

In July 2019, the government set out a five-year deal, which would deliver £2.59 billion annually between 2019/20 and 2023/24. In addition, the government committed a non-recurrent additional investment of £100 million across years 4 and 5 to support contractors, through an increase to the retained medicine margin. The retained margin is a profit that pharmacies can earn on dispensing medicines through cost effective purchasing.

2024/25 to 2025/26 funding deal

In March 2025, the government published details of a new two-year CPCF settlement covering 2024/25 and 2025/26. The agreement secured the below funding for the community pharmacy sector:

  • £2.7 billion in 2024/25; and
  • £3.0 billion in 2025/26.

This represented a 20% increase compared with 2023/24 funding, and a 15% increase compared with 2024/25 funding. By comparison, the overall NHS budget is set to increase by around 6% in 2025/26.

The settlement also included:

  • £215 million for pharmacy funding and services linked to NHS England’s Primary Care Access Recovery Plan. The plan set out several proposals to improve patients’ access to primary care.
  • The write-off of £193 million in historic medicines margin over-delivery, largely accrued during the Covid-19 pandemic. The medicines margin is a small profit that pharmacies can earn on dispensing medicines through cost-effective purchasing. The government estimates how much money the pharmacy sector as a whole, will receive through this margin, and factors that in to the funding deal. Over-delivery happens when the pharmacy retains more medicine margin than the government anticipated for in the funding deal. This creates an overspend that the government would recover by lowering medicine reimbursement prices in the subsequent period.
  • An expansion to existing pharmacy services, including the new medicine service and pharmacy contraception service.

Stephen Kinnock, the then Minister of State for Social Care said the investment would enable it to “embed and build on the range of clinical services that we commission from community pharmacy as we seek to improve access through reform and better use the skills of pharmacy teams to keep people well in their communities”. 

2026/27 funding deal

In May 2026, the government published details about a new Community Pharmacy Contractual Framework (CPCF) covering 2026/27. The agreement secured a total of £3.636 billion in 2026 /27 for the community pharmacy sector. This represents an increase of £340 million (10%) compared to 2025/26. The settlement includes:

  • The integration of the Pharmacy First budget into the CPCF budget. Pharmacy First is an NHS service in which pharmacists can supply medicines to treat seven common illnesses, that would otherwise need to be prescribed.
  • The write-off of up to £239 million in historic medicines margin over-delivery.
  • An increase in the single activity fee by 4.1% from £1.46 in 2025/26 to £1.52 in 2026/27, backdated to take effect from May 2026. Other activity fees remain unchanged. This fee is essentially the fee provided for dispensing a prescription.

Existing pharmacists, and some other healthcare professionals, can undertake further clinical training enabling them to become independent prescribers. This enables them to diagnose illness and prescribe medications to treat or manage illness. Following changes to pharmacy education, pharmacists qualifying in 2026 under the new education framework will be the first to qualify automatically as independent prescribers.

Previously, there was no NHS contractual provision in which pharmacists could use an independent prescribing qualification to directly prescribe medicines in community pharmacy. The 2026/27 contract introduces independent prescribing from autumn 2026. This will include prescribing within the existing Pharmacy First clinical pathways, the pharmacy contraception service, and up to five new prescribing pathways which are to be defined.

Stephen Kinnock, then Minister of State for Social Care said the investment would enable it to “roll out independent prescribing – a government manifesto commitment – which will allow us to improve access to primary care and better use the skills of pharmacy teams to keep people well in their communities”.

The contract also says CPE and the government have committed to work jointly on a programme of reform for the contract.

Stakeholder response

Pharmacy stakeholders welcomed the additional funding but reiterated longstanding concerns about pharmacy funding being below the level needed to maintain long-term viability.

CPE welcomed the funding and said it would cover the growth in pharmacy activity and inflation in the coming year but warned that it “does not make further significant progress towards delivering sustainability to an increasingly unstable sector”.

Dr Olivier Picard, Chair of the National Pharmacy Association (NPA) said “we hope this announcement will bring some immediate relief to pharmacies who are being hit by crippling new costs”, but cautioned that the contract “falls significantly short of the long-term investment and reform community pharmacy requires”. The NPA is the trade association for independent community pharmacy professionals in the UK.

Wider concerns about the funding model

Parliamentary and sector stakeholders have raised concerns about the structure, adequacy and operation of the CPCF as a funding model since its introduction in 2019.

The concerns have also highlighted a lack of funding as contributing to staff shortages and pharmacy closures.

Detailed discussion is available in the Library briefing on Community pharmacy in England.

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