Constitutional failures lead to criticism of North East London LPC

North East London Local Pharmaceutical Committee failed to comply with its constitution for a number of years, an independent review of the LPC’s activities has found. The LPC disputes the content of the review, saying that it gives only a partial view, a misleading impression and that it is fundamentally flawed.

The review highlighted the following shortcomings:

• Failure to make LPC accounts available to the pharmacy contractors it represents and to the Pharmaceutical Services Negotiating Committee
• Failure to produce annual reports
• Failure to call annual general meetings
• Failure to pay to the PSNC money it has collected from contractors for that purpose
• Failure to seek guidance from, or report to, the PSNC on local negotiations
• Failure to report changes in its membership to the PSNC

The independent review also found that three of the seven primary care trusts covered by the LPC did not consider it to be representative of their pharmacy contractors. Nor did 87 of the LPC’s electorate of 352 contractors, including representatives of the Company Chemists Association, whose members hold 65 contracts in the LPC area.

It further found that the combination of the roles of treasurer and secretary in a single post could lead to a conflict of interest and that there was a perception that LPC decisions were made purely by its officers.

The review was carried out by an external reviewer — Richard Bates, CPFA — selected by North East London Strategic Health Authority. It was conducted using a semi-structured interviews and the submission of written material.

Recommendations

The review resulted in four sets of recommendations being made.

The first set suggests that the NEL StHA should ask all PCT chief executives to consider the findings of the review and agree a governance framework for LPCs. The StHA is also asked to conciliate between the NEL LPC and the PSNC to try to resolve their ongoing dispute. NEL StHA is also asked to report the review to the NHS Counter Fraud and Security Management Service.

The seven PCTs are asked, among other things, to consider whether or not they will continue to recognise the LPC as a local representative committee. They are also asked to ensure that their professional executive committees scrutinise and agree the constitutions of all local representative committees, including those of other professions, and look at the LPC’s finances.

A spokeswoman for the StHA told The Journal that it had already carried through the recommendations made in relation to itself and that it is now for the boards of the seven PCTs to decide what they are going to do.

The LPC is asked urgently to resolve its dispute with the PSNC and settle its outstanding debt. It is also asked to amend its constitution, to appoint a financial officer, to ensure good governance, to have external oversight of its elections, to address its constitutional breaches and to carry out an investigation into a disputed LIFT scheme, together with Newham PCT. The PCT has also been asked to investigate the concerns raised by Trevor Hadley of Anthony’s Pharmacy as a complaint (see Panel below).

More widely, all pharmacy contractors represented by NEL LPC are asked to consider their representation at national level, to ensure that the LPC reports appropriately on the recommendations made to it and to consider whether they are represented by it.

For its part, NEL LPC — whose secretary Hemant Patel is also President of the Royal Pharmaceutical Society — accepts the review’s recommendations and admits that it has been tardy in relation to the publication of accounts and failed to call AGMs. It has acted promptly to rectify some of the failings identified in the review. These actions include putting audited accounts for 2002–05 to an AGM held on 30 June.

It has also drafted revised audit procedures and says that work to review the committee’s governance was started by its audit committee in November 2004. This work has now been modified to take into account the complaints that led to the StHA’s review.

In its defence, NEL LPC says that it has been placed under extreme pressure by having to accommodate NHS organisational changes, including the recent transition from three health authorities to eight PCTs (subsequently changed to seven), a shortage of trained staff, the election of a new committee, the increased ambitions of pharmacists and a greater focus on community pharmacy.

It says that matters that would normally be covered in an AGM are dealt with at bi-monthly contractors’ meetings and that these meetings, taken together with local pharmacy forum meetings amounted to 70 contractors’ meetings in one year. It adds that the failure to hold AGMs is common among LPCs and is brought about by apathy among their constituent contractors.

So far as its failings in relation to circulating accounts to contractors or to provide them on request is concerned, the LPC says that accounts were prepared and approved by LPC members, who included representatives of the CCA and the other complainants.

PSNC dispute

On the matter of the dispute between the LPC and the PSNC, NEL LPC points out that LPCs, not the PSNC, are the statutory representative bodies and that the PSNC is subordinate to LPCs. It says that the decision to withhold funds from the PSNC was a decision of the whole LPC, including representatives of the contractors who prompted the review, and that it is supported by the majority of contractors. The decision was taken because the LPC believed that the PSNC had failed to implement resolutions of the annual conference of LPC representatives in a timely and appropriate manner. In particular, NEL LPC believes that the PSNC failed to negotiate the terms of the new pharmacy contract in a manner that adequately takes into account the interests of smaller independent contractors in the NEL area.

As a result, it withheld levies that would have been payable to the PSNC from April 2002 to December 2003. On 17 December 2003, the PSNC ceased providing services to NEL LPC contractors and no payments have been made since then. Despite this, the LPC continued to collect levies from contractors. It says that outstanding funds due to the PSNC up to the point at which it ceased to provide services to NEL contractors are safe in bank accounts and available to be paid to the PSNC when its dispute is resolved.

Mr Bates (the reviewer) rejected the LPC’s reasons as being insufficiently credible to support the ongoing dispute with the PSNC.

Whether the LPC will separate the roles of treasurer and secretary remains to be seen. In this regard, it points out that the PSNC does not have a treasurer and that the LPC has always had procedures to safeguard its funds and to provide a complete audit trail.

It is clearly surprised at the review’s finding that some PCTs do not consider the LPC to be representative of its contractors.

“These misgivings have never been brought to our attention by any PCT, all of which have dealt with the LPC for some years,” it says.

Further, the LPC says that it is modelled along the same lines as all other LPCs, with representatives from all contractor groupings — independents, small multiples, Company Chemists Association and Co-ops — in numbers that correspond to the local mix. This composition, and the LPC constitution, had been agreed by all involved.

Anthony’s Pharmacy

In relation to the complaint from Mr Hadley of Anthony’s Pharmacy, the review found failings on the part of Newham PCT, as well as NEL LPC. So far as the PCT’s involvement is concerned, it found that it had tried to set up a meeting between Anthony’s Pharmacy, NEL LPC and members of the consortium that was awarded the pharmacy contract in order to broker an agreement to work together. The meeting had been cancelled at short notice by the LPC secretary and the LPC had declined subsequent offers to meet. The PCT had failed to respond to a range of correspondence from Anthony’s Pharmacy concerning the matter.

So far as NEL LPC is concerned, the review says that it is not clear that sufficient action was taken to engage Anthony’s Pharmacy within the successful consortium. Anthony’s Pharmacy was not included even though it fell within the qualifying distance for consortium membership. Further, the qualifying distance had been extended from 1km to 1.2km in April 2004, enabling the inclusion in the consortium of a contractor who was an LPC member (Shiv Bagga). Much later, the PCT received confirmation that the pharmacist in question had resigned from the LPC, the review says.

The LPC says that the decision to change the consortium’s qualifying distance was taken by members of the consortium, not the LPC, that Anthony’s Pharmacy chose not to take part on the consortium and that Mr Bagga had never resigned from the LPC. “This is an example of the inaccuracies that the review is riddled with,” Mr Patel said. He added that the sum of money the review says is outstanding to the PSNC by NEL LPC is also wrong. It is £90,000 and not £45,000.

Reporting that the LPC failed to acknowledge correspondence from Anthony’s Pharmacy and that it failed to respond appropriately to requests that the LIFT project be discussed at LPC meetings, the review concludes that the LPC failed to discharge its statutory responsibility to represent contractors. It also finds that the LPC failed to comply with a constitutional requirement to consider complaints between contractors and to make representations on their behalf to the PCT, the StHA, social services and the PSNC. The review made no findings itself about the allegation that the LPC and Newham PCT had prearranged the allocation of a new pharmacy contract in relation to a Local Implementation Finance Trust funded developmemt with the express aim of excluding Anthony’s Pharmacy.

The LPC says that the fact that complaints were sent to the PCT/StHA has revealed that, like most, if not all, LPCs it has no formal procedures for investigating complaints itself, even though its constitution requires it to do so. It adds that a complaints procedure should be established that allows recourse to another LPC in cases of dissatisfaction, with a possibility of appeal to the relevant PCT.

Colin Baldwin, chief executive of the Company Chemists Association, confirmed that the 65 CCA member contracts constituted part of the 87 contractors who had sought the investigations. He denied that the complaint had been orchestrated by the CCA and said that it had been Mr Bates who sought to meet CCA representatives as part of his investigation, and not vice versa. Nor did the CCA wish to see the LPC system undermined in any way.

Mr Baldwin said: “We want a strong, viable LPC infrastructure.”

Mr Baldwin agreed that there was no suggestion that LPC funds had been misappropriated or misused.

After publication of the final review, a further response from NEL LPC said that the review was misleading. “While some reference is made in the final report to the LPC’s response, most of the detail of that response is omitted from the review,” it said. “It is NEL LPC’s view that the review has failed properly to take into account the detail of that response, thereby giving only a partial review and a misleading impression. It is NEL LPC’s view that much of the review is, therefore, fundamentally flawed.”

It adds: “The findings in fact of the review relate almost entirely to corporate governance issues, which are separate to the issue of contractor representation. Findings that are relevant to the issue of whether the LPC represents the contractors are not so much findings as mere assertions by some contractors that they do not regard the NEL LPC to be representative of the local contractors. There is no evidence to support the contention that the LPC is not representative of all the contractors.”