The UK pharmacy funding crisis is deepening after new analysis by the National Pharmacy Association (NPA) revealed community pharmacies are losing an average of £5.8m a month by dispensing NHS medicines at below cost, raising fresh fears of closures and worsening drug supply problems across England.
According to the NPA, pharmacies are typically reimbursed for just 80% of the cost of commonly prescribed medicines, including antidepressants, painkillers and blood pressure drugs. This means pharmacists are routinely subsidising NHS prescriptions from their own finances simply to keep services running.
Henry Gregg, chief executive of the NPA, described the situation as unsustainable, warning that pharmacies are being pushed to the brink while remaining a core pillar of the NHS.
He said it was unacceptable that pharmacies were funded below the cost of medicines, arguing that no other part of the health service would be expected to operate under such conditions.
Mounting Financial Pressure on Pharmacy Owners
An NPA survey conducted this year found that two-thirds of pharmacies made a loss in 2025. The financial strain has forced 72% of pharmacy owners to dip into personal savings or remortgage their homes to stay open.
The association said real-terms funding for pharmacies has fallen sharply over the past decade, leaving the sector facing a £2.6bn funding gap. Without reform, the NPA warned more pharmacies could be forced to leave the NHS or close altogether, reducing access to care in local communities.
Medicine Shortages Drive Up Costs
The funding crisis is being compounded by severe medicine supply issues. Pharmacies are currently dealing with aspirin price rises of up to 1,000%, driven by global supply chain disruptions. These shortages have added further pressure to already stretched businesses, increasing the risk of delayed prescriptions for patients.
Pharmacists say unstable supply chains make it harder to source medicines at affordable prices, while reimbursement levels remain fixed, widening losses with every prescription dispensed.
Calls for Urgent Contract Reform
The NPA is calling for urgent reform of the NHS pharmacy contract, which it says is outdated and no longer fit for purpose. Gregg said pharmacies want to work with the government to deliver more care closer to patients, easing pressure on GPs and hospitals.
However, he warned that without action to stop pharmacies being paid below cost, the network that underpins local healthcare could rapidly shrink.
Government Response on Medicine Supply
The Department of Health and Social Care said it was taking steps to strengthen domestic medicine supply by investing up to £520m in UK manufacturing of medicines, diagnostics and medical technologies.
A spokesperson added that the government is working with the NHS, regulators and international partners to reduce red tape, support the life sciences sector and improve supply chain resilience.
Background: A Sector Under Strain
Community pharmacies have faced rising staffing costs, inflation and medicine shortages alongside flat funding for years. With pharmacies often acting as the first point of contact for patients, health leaders have repeatedly warned that closures could increase pressure on already overstretched GP surgeries and hospitals.