Margin Sharing Arrangements

Financial Framework · 2025-26

Global Sum

Part of a pharmacy's income is dependent on the money made on Part 7 Drug Tariff medicines — this profit is referred to as the margin.

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Overview

What Is the Margin?

As touched on in the introduction to pharmacy funding, part of a pharmacy's income is dependent on the money made on Part 7 Drug Tariff medicines they source and provide on prescription — this profit is often referred to as the margin.

This incentivises efficient buying, as pharmacies will shop around for the best price for the items they are supplying to get the best deal possible on behalf of the NHS.

To monitor the margin, the Scottish Government has a pricing survey completed to compare the invoice price paid by pharmacies to the price Practitioner Services pay — the difference being the margin earned. The survey result is used to monitor the total margin across the year.

PCA(P)(2025)18

2025-26 Arrangements

Guaranteed Minimum Funding

£120m

The level of guaranteed minimum funding for contractors for 2025-26.

Part 7 Drug Tariff Mapping

£100m

Continued mapping of funding from Part 7 (Generic) Drug Tariff as guaranteed income — an increase of £20m for 2025-26.

Key Points from Circular PCA(P)(2025)18

The level of guaranteed minimum funding for contractors is £120 million.

The continued mapping of funding from Part 7 (Generic) Drug Tariff as guaranteed income will increase by £20m to £100m for the financial year 2025-26.

Full arrangements are set out in circular PCA(P)(2025)18.

Mechanism

How the Margin Sharing Works

Pricing Survey
Scottish Government completes a pricing survey comparing invoice prices paid by pharmacies to the reimbursement price.
Margin Calculated
The difference between what pharmacies pay and the NHS reimbursement price is the margin earned across the network.
Guaranteed Income
The guaranteed minimum ensures contractors receive at least £120m regardless of actual margin generated.