Lawyers acting for the Pharmaceutical Services Negotiation Committee (PSNC) criticised the government’s handling of the introduction of community pharmacy cuts in 2016, at the appeal hearing into a judge’s refusal to order a judicial review into the cuts.
In a case brought jointly with the National Pharmacy Association, the Court of Appeal was told on 22 May 2018 by Alison Foster, queen’s counsel (QC) for the PSNC, that government consultations carried out before the cuts were “very far from a model” of rigour and transparency.
Foster added that the secretary of state for health and social care, Jeremy Hunt, “failed to inform himself adequately as to the impact of the proposals on the sector”.
And she claimed: “He consciously withheld material information from the PSNC during the course of the consultation process.
“This non-disclosure was the more egregious, given that on numerous occasions the PSNC actually requested sight of such information, only to be told that it did not exist.”
“To compound matters, certain key information was only disclosed after the decision was made public.”
Foster told the court that in July 2015, before the consultation process began, the Department of Health (now Department of Health and Social Care [DHSC]) had a “secret meeting” with an unidentified “industry insider”.
“The PSNC was not made aware of this event either at the time of the meeting or during the consultation process,” she added.
The industry insider provided information about the profitability of the independent pharmacy sector, to which the PSNC was given no opportunity to respond.
Foster added: “The secretary of state could not lawfully proceed on the basis of the limited information available, particularly in light of the serious ramifications of the proposed funding cuts.”
The PSNC was not told that the DHSC had carried out “indicative analysis” of the profitability of small pharmacies before concluding that the sector “would be able to withstand the proposed funding cuts.”
She added: “The failure of the secretary of state to disclose that he was relying on such material, requested by the PSNC as part of the consultation, was unlawful, as was the fact of his reliance upon it.”
The material, which was said to indicate that small pharmacies have an average 15% operating profit margin, was “fundamentally flawed and misleading.”
“The factual material now available reveals an intention by the department to secure a fundamental reform of the sector,” said the QC.
“Furthermore, it showed a clear awareness that the reform would put some pharmacies out of business.”
Resisting the appeal, James Eadie QC for the secretary of state said the “package of interlinked measures” was aimed at ensuring that NHS resources were “directed in an efficient manner, whilst ensuring that patients’ ability to access pharmacies is protected.”
Overall funding was to be reduced from £2.8bn to £2.687bn in 2016/2017, and to £2.592bn in 2017/2018, he said.
The context of the whole package, the Eadie added, was “the pressing need to make efficiency savings in the NHS budget.”
Disputing claims that the consultation process was inadequate, he added: “In short, the PSNC was expressly invited to provide information about the financial aspects of the proposals, including their likely impact on pharmacy viability.”
The consultation was “a two-way dynamic process” and the DHSC had made it clear from the outset that “it would be interested in receiving more evidence on business impacts and was looking to the PSNC to provide that evidence.”
When dismissing the challenge to the cuts last year, High Court judge Mr Justice Collins agreed it was “regrettable” that the DHSC failed to inform the PSNC of the statistical method it was using to estimate closure numbers.
However, he added that was not “so unfair as to amount to unlawfulness” and the judge ruled that the outcome would in any case have been the same.
The Appeal Court hearing lasted two days, and the court reserved its decision until a later date.