PSNC denies claims the five-year contract could see a fifth of pharmacies close

Exclusive: A Pharmaceutical Services Negotiating Committee regional representative has suggested that, unless pharmacies change the way they operate, at least 2,000 pharmacies could close as a result of the ‘community pharmacy contractual framework 2019/2020 to 2023/2024’.

Simon Dukes, chief executive of the Pharmaceutical Services Negotiating Committee

The Pharmaceutical Services Negotiating Committee (PSNC) has distanced itself from meeting minutes suggesting it believes a fifth of pharmacies could close as a result of the five-year pharmacy contract.

Minutes from the Community Pharmacy South Central Local Pharmacy Committee (LPC) November 2019 meeting said the annual funding of £2.592bn agreed in the contract “will only support 9,000–9,500 pharmacies remaining viable businesses”.

The minutes also noted a closure rate of 300 pharmacies per year.

The comments made at the LPC meeting were reported to have come as part of a PSNC update.

However, Simon Dukes, chief executive at the PSNC, said the organisation does “not recognise these figures and it is wrong to state them as PSNC policy”.

“The PSNC has not talked about how many contractors there should be — that is for the market to decide,” he said, adding that the comments made were the personal opinion of the PSNC’s regional representative, who had addressed the meeting, “which has been conflated with a PSNC update”.

Dukes told The Pharmaceutical Journal in November 2019 that it had modelled how pharmacies would be impacted financially by the contract, but declined to put a definitive number on how many pharmacies it expected would close.

With 11,539 community pharmacies currently open in England, the figures suggests a closure of at least 2,039 pharmacies as a result of the ‘community pharmacy contractual framework 2019/2020 to 2023/2024’.

The contract froze funding at £2.592bn per year for five years, which pharmacists argued would present “significant challenges to what is already a financially strained sector”.

But Gary Warner, the south central regional PSNC representative who addressed the meeting, told The Pharmaceutical Journal that the remark he made “wasn’t part of the PSNC conversation”.

“What I was trying to illustrate to people around the table was how much we have to change,” he said, in light of the “fixed envelope” of £2.592bn per year for five years.

“If I look at my pharmacy, at the end of the year, five years ago, I had £80,000 which paid for me as a pharmacist and £30,000 to take some of the risk of running the business,” he explained, adding that under the current funding “not all those [pharmacies] that are around now” could continue earning that income.

Warner said his “back of the envelope” calculation found that if 11,500 pharmacies all earned £80,000 per year with £2.8bn of government funding, approximately 2,000 fewer pharmacies would be able to earn the same “within an envelope of £2.6bn”.

“If you want to remain as a pharmacy you need to change the way you work … you need to take stock of what you do and how you do it, because you can’t keep cutting costs,” he said.

The PSNC told The Pharmaceutical Journal in September 2019 that it was in “urgent talks” with the government over how the funding would be distributed after North East London LPC published a ‘profit and loss predictor’, which predicted the closure of pharmacies as a result of contract.

Commenting on the LPC minutes, Hemant Patel, secretary of the North East London LPC, told The Pharmaceutical Journal that the predictor “indicates that in many areas over 80% of pharmacies are seriously concerned about long-term viability”.

Last updated
The Pharmaceutical Journal, PJ, January 2020, Vol 304, No 7933;304(7933):DOI:10.1211/PJ.2020.20207578

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