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Pharmaceutical Services Negotiating Committee


Since Local Pharmaceutical Services (LPS) contracts were introduced a number of years ago, as an alternative to the national contractual framework, a number of developments have occurred in the proposed use of LPS contracts.

PSNC and the Department of Health agreed as part of the new contract negotiations that LPS contracts would be used as the basis to provide support to exisiting ESPS pharmacies and also to some pharmacies that are dispensing low volumes of prescriptions.

The Pharmacy White Paper - Pharmacy in England Building on strengths – delivering the future published in April 2008 also proposes that Local Pharmaceutical Services may be a mechanism to allow Primary Care Trusts to commission services locally, where the services do not fit neatly within the national framework.

Details of the different emerging forms of LPS can be found below.

NOTE: LPS arrangements do not apply in Wales - the contents of this page apply to England only

Returning to the Pharmaceutical List (NEW 10 October 2012)

PCTs have been conducting their annual reviews to confirm whether ESP LPS pharmacies continue to comply with the conditions specified in the Secretary of State Directions (mainly related to the maximum prescription thresholds). As a result, some pharmacies have been found to have exceeded the threshold, and have been given six months’ notice of termination of the ESP LPS arrangements.

A query has been raised about the right to return to the pharmaceutical list, and some PCTs have requested a copy of a letter from the Secretary of State, confirming the right to return exists. We have checked with the Department of Health, that has said:

‘ESPLPS is distinct from LPS in that all those admitted to ESPLPS would have been on the pharmaceutical list beforehand. The policy is that ESPLPS providers have a right to return to the pharmaceutical list unless the reason for termination of the ESPLPS contract is that fitness to practise provisions are not met.

The right of return to the pharmaceutical list is set out in Directions (Direction 21(1) (d) and 21(3) of 2005 Directions (signed 28 Oct 2005)) therefore no individual letters were issued to contractors by the Department of Health.

If the conditions in Direction 21(1) (d) apply, the PCT is required to terminate the ESPLPS agreement in accordance with Direction 21(3). This would apply in the majority of cases - exceptions, especially where there are fitness to practise issues, are provided elsewhere in Direction 21. The date of termination is the date on which "...the qualifying pharmacist is included in the Primary Care Trust's pharmaceutical list in respect of the premises specified in the agreement."

It should be noted that there is a requirement for the PCT to notify DH and NHSBSA when an ESPLPS contract is terminated (Direction 21(4))’

Therefore, ESP LPS contractors do not have to produce any documentary evidence from the Secretary of State confirming their right of return when they apply to return to the pharmaceutical list.


PSNC has been discussing with the Department of Health, the arrangements for ESP LPS pharmacies, during the transition from PCTs to the NHS Commissioning Board. Because the current ESP LPS contracts are scheduled to come to an end on 31 March 2013, measures needed to be agreed, to ensure the continued support for these essential pharmacies from that date.

In due course, the PSNC will discuss the commissioning of pharmacy services, including the arrangements for essential small pharmacies, with the Commissioning Board. To allow sufficient time for those discussions to take place after the NHSCB has taken on its responsibilities in April 2013 the Minister has agreed that there should be a further extension to the existing contracts, until March 2015. PSNC is delighted with this decision, as it will give reassurance to the 80 or so remaining ESP LPS pharmacies.

Secretary of State Directions have been issued and PCTs have been instructed to make arrangements for the contracts to be extended. If ESP LPS contractors have not heard from their PCTs within a reasonable period, we suggest that you contact them to remind them of the Directions, and the need to formally extend the contracts before they come to an end.


Update - New Medicine Service – Essential Small Pharmacy LPS

The Secretary of State Directions under which Essential Small Pharmacy LPS is established have recently been amended, but await publication. The Pharmaceutical Services Negotiating Committee has obtained a copy, and they are available here.

These Directions, which came into force in November 2011, make two important changes. First, they increase the annual target payment to £80,354. This follows the increases made in the funding for pharmacies on pharmaceutical lists agreed for 2011 – 2012. The monthly limit is also raised to £5826.

The other significant amendment is to introduce into the ESP LPS Agreement, the New Medicine Service. The Directions now require a PCT to ensure that the ESP LPS Agreement, which is set out in the ESP LPS contracts, is updated to allow the pharmacist to provide the New Medicine Service, should the ESP Pharmacist want to provide the service. The ESP Pharmacy will need to comply with the same conditions as if it were on the pharmaceutical list.

Finally, the Directions also provide for the Agreement to be amended to include the provision of the remaining two Advanced services – the Stoma Appliance Customisation Service and the Appliance Use Review Service. Again, the ESP pharmacy will need to comply with the same conditions as would a pharmacy on a pharmaceutical list.

ESP contract-holders who wish to provide the New Medicine Service (and / or the two appliances advance services) should contact their PCT to request that the agreement is amended. The Directions issued by the Secretary of State require the PCT to make that change, if requested.

ESP LPS update

Essential Small Pharmacy contractors are aware that their existing LPS contracts with PCTs are due to come to an end on 31 March 2013. These contracts were renewed in 2010 for a period of three years, and the expiry coincides with the point at which the NHS Commissioning Board is expected to take over from Primary Care Trusts (subject to parliamentary process).

PSNC has recently met with Department of Health officials, to discuss the Essential Small Pharmacies Scheme beyond March 2013. Ultimately, the decisions about the continuation of the support mechanisms will be taken by Ministers, but we have begun exploring the different options. We will update this page as and when there are matters to report.

In the meantime, PSNC recommends that all Essential Small Pharmacies do their utmost to provide any services required by their PCTs and their local population, so that if necessary we will have evidence of your commitment to meeting local needs. 


In April 2006, the former LPS Pilot Schemes were replaced when Regulations were introduced providing for permanent arrangements.  The Regulations are accessible on the website of the Office of Public Sector Information.  Click the following link to access the 2006 Regulations.

LPS Regulations 2006

The Department of Health has issued guidance on the LPS Regulations, which can be accessed on the link below:

Department of Health Guidance on LPS

In May 2009 the Department of Health issued a template for a model contract for LPS for PCT consideration for use when commissioning these services. The template reflects the mandatory terms for any LPS contract and can be accessed on the link below

LPS Model Contract

For more information or support on Normal LPS, please contact Barbara Parsons.

Low Volume LPS

PSNC discussed with the Department of Health and the NHS Confederation  the development of Low Volume LPS (LVLPS) for low volume contractors. A LVLPS contract can specify services to be provided by a low volume pharmacy in order to meet local needs for which the pharmacy would receive increased payment levels.

Subject to the agreement of the PCT, this enables a low volume pharmacy providing valuable services to its patients to continue to remain viable, after the protected professional allowances ended on 31 March 2008.

The Department of Health prepared detailed guidance on the new LPS arrangements which commenced in April 2006 (see link above). A LVLPS contract could be made under these new regulations and PSNC with the assistance of London LPCs proposed a number of additional services that might be useful in meeting the needs of the local population for which LVLPS contractors would receive additional funding to offset the loss of the protected professional allowance. The guidance draws attention to the benefits of LVLPS as a means of continuing provision of pharmaceutical services after the protected payments ceased.

The Department of Health wrote to all PCTs in March 2007 to remind them that the Protected Professional Allowance would be withdrawn after 31 March 2008, and indicated how PCTs might identify those pharmacies. The letter stated that PCTs might wish to consider whether further action is required to secure the adequate provision of pharmaceutical services in areas served by pharmacists affected by the cessation of Protected Professional Allowance payments.

Affected pharmacy contractors should also identify for themselves, what services they are currently not providing, but which could be of interest to the PCT in meeting local needs.

PSNC encourages Pharmacy Contractors to contact their LPC who will be able to offer guidance, particularly if there are local unmet needs, and can also provide contact details for relevant staff at the PCT.

For more information on the Low Volume LPS, please contact
Barbara Parsons.


PSNC and the Department of Health agreed that an LPS contract would replace ESPS from 1st April 2006.

This new ESP LPS has been developed through negotiation by PSNC with the Department of Health and the NHS Confederation.

Click on the link below to access the Department of Health website, from where copies of the ESP LPS Direactions sent to PCTs in England about the implementation of the Essential small pharmacies (ESP) pilot scheme and the ESP Local pharmaceutical services (ESPLPS) agreement can be downloaded:

Essential Small Pharmacy LPS Directions

Note: The Drug Tariff includes details about the Essential Small Pharmacy Scheme in Wales, but that section is not relevant to the Essential Small Pharmacy LPS contracts in England.

For more information or support please contact PSNC's Information Team



1. I have heard that ESPS stopped in March 2006, is that correct?
Yes. The Essential Small Pharmacy Scheme ended on 31 March 2006, and was replaced by the Essential Small Pharmacy Local Pharmaceutical Services scheme (ESPLPS) from 1 April 2006. In many respects the ESP LPS scheme is the same as the ESPS arrangements.

2. I have opened a pharmacy since 1 April 2006 and I would satisfy the ESPS criteria. Can I claim ESPS payments.
No. The ESP LPS which replaced the ESPS arrangements was available only for pharmacies that applied by 31 October 2005.

3. I have an ESP LPS contract. When will this end?

ESP LPS terms are set out in binding contracts, signed by individual contractors and PCT normally for five years.  In 2010, the Minister issued Directions granting an extension to those pharmacies that continued to meet the conditions of ESP LPS, until March 2013.

PSNC will continue to discuss with the Department of Health, arrangements extending beyond that date.

4.  What happens if I exceed the maximum threshold number of prescriptions?

Essential Small Pharmacy LPS are permitted to dispense only up to 26400 prescription items a year.  If this threshold is exceeded, the PCT is required to give notice that the pharmacy will be removed from the ESP LPS arrangements.  An ESP LPS pharmacy given notice that it is to be removed from the arrangements, may apply to the PCT to exercise the right of return to the pharmaceutical list.  This would result in loss of the protected payments, and the pharmacy could not then reapply for ESP LPS arrangements.

5. Can I transfer my ESP LPS to a new owner?

Yes, this should be possible - the terms of the contract should include that right.  But the contract should be checked carefully.

6. Can I relocate my ESP LPS pharmacy?

No.  The ESP LPS Directions make no provision for relocation.  Therefore, if it is necessary to relocate, the pharmacy would first need to make an application to be returned to the pharmaceutical list (whereupon the supplementary payments ceases) and then apply for a relocation.  Because pharmacies cannot reapply for inclusion in the ESP LPS arrangements once the ESP LPS contracts have been terminated, it is essential that pharmacy owners consider very carefully, whether to take any steps that would lead to removal of the ESP LPS contract, and to discuss such issues as whether it would meet the requirements for relocation etc.

More Information on LPS

For more information on Normal LPS and Standard Form LPS, please contact Barbara Parsons.

For more information on ESP LPS, please contact
Steve Lutener.

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