Dispensing Practices, NHS Funding, and the Geography of Inequality

Dispensing practices differ from standard GP surgeries by directly providing medications to eligible patients, improving access in rural areas where pharmacies are scarce. This integration streamlines care and reduces the burden on external pharmacies. Delivering these additional services comes with associated costs that non-dispensing practices do not incur.

NHS regulations restrict which practices can dispense and which patients are eligible:

These regulations primarily limit dispensing practices to rural areas and influence funding distribution.

For 2023, information on the dispensing status of practices is available from publicly available NHS Payments to General Practice data. We combined the payments data with practice-level estimates of relative deprivation from the Office of Health Improvements and Disparities, extrapolated to 2025.

A scatter plot of IMD vs. Payments per Registered Patient by dispensing status reveals two distinct clusters of practices, showing that practices serving populations in wealthier areas are more likely to dispense, and consequently receive more funding:

Prescribing and dispensing-related services require additional financial and operational investments, which non-dispensing GP surgeries do not incur. While some prescribing and dispensing-related costs are directly reimbursed, others are absorbed as operational losses, limiting overall profitability. Examples include:

Dispensing practices predominantly serve older populations with higher chronic disease prevalence. Thus, comparing payments per weighted patient rather than registered patient represents a fairer assessment. We weighted payments based on the Carr-Hill index, which accounts for age, sex, nursing/residential care, medical conditions, mortality, patient turnover, and rurality-related costs. When the number of patients were weighted for need, the disparity in payments was £72 per weighted patient.

Since dispensing practices function as both GP surgeries and community pharmacies, a direct funding comparison with non-dispensing practices is misleading. Prescribing- and dispensing-related payments are described as follows:

The disparity in funding disappears when prescribing and dispensing-related payments are removed.

The following bar chart comparing total vs. prescribing payments across IMD quintiles confirms:

The following summary presents descriptive comparisons between dispensing and non-dispensing practices across workforce size, patient satisfaction, and earnings. Please note that these trends are observational and should not be interpreted as causal relationships: we have not conducted statistical analyses to account for potential confounding factors or underlying differences between the two types of practices.

Dispensing practices tend to have larger workforces relative to patient list size and healthcare need.

Dispensing practices consistently performed better when patients were asked about their Overall satisfaction, Experience of contacting the surgery, Continuity of care and Confidence and trust.

GP partners at dispensing practices earn £12,200 more per year before tax than non-dispensing counterparts.

It is well documented that practices in deprived areas receive less funding than practices in more affluent areas. However, the general practice funding model is complex, with multiple income streams depending on the services provided. Understanding the costs to provide these additional services compared to the income received for them is difficult (if not impossible given the lack of available data). This article highlights some of this complexity, illustrating how the distribution of dispensing practices results in more funding for practices in more affluent areas, as compensation for providing an additional service when compared to non-dispensing practices. Making general practice funding more sustainable and equitable therefore requires a holistic approach across all funding streams: there is no single solution. 

Importantly, any funding and contractual reforms should focus on allocating resources proportionate to need, rather than simply existing workload. Current funding mechanisms, such as the Carr-Hill formula, primarily reimburse practices based on retrospective measures of workload—factors like patient demographics and historical service use. However, these formulas often fail to account for the additional challenges faced by practices serving areas with greater health needs. A more equitable approach would explicitly integrate measures of deprivation and healthcare inequity into funding calculations, ensuring that resources are distributed in a way that enables practices to meet the needs of their communities, rather than merely sustaining existing service patterns.