Why small community pharmacies are at risk and how we can save them

In June 2018, The Pharmaceutical Journal celebrated 70 years of the NHS with a timeline that plotted pharmacy’s history against the years since the NHS was born. I was disappointed to see that as early as 1981, community pharmacy was already being viewed as a problem child. And in 2016, despite talk over the years of community pharmacy’s importance, significant cuts were made to its funding.

Keith Ridge, chief pharmaceutical officer for England, is reported to have suggested that there were 3,000 too many community pharmacies during an All-Party Pharmacy Group meeting in January 2016, and later in the same month, then health minister Alistair Burt agreed that funding-related pharmacy closures could reach somewhere between 1,000 and 3,000. However, the Department of Health and Social Care’s (DHSC) impact assessment of the cuts, produced in October 2016, stated: “It is not the government’s intention to reduce the number of community pharmacies” — a surprising statement given the comments of both Ridge and Burt.

Two years on, Ridge told The Pharmaceutical Journal
: “I regret the pain [the cuts have] caused. But I think people might look back on this when I have long gone and actually see this as a watershed moment.” But pharmacy numbers have dropped and independent contractors feel we are now teetering on a cliff edge.

Independent community pharmacies are at greater risk of closure than competing multiples and it is worrying that those who make the decisions that affect community pharmacy seem unconcerned by this.

Several large (and some medium) chain multiples now have wholesaler arms — ‘vertical integration’ — which raise the potential for these entities to influence supply, market prices and profit margins in a way that independent pharmacy contractors are not able to.

A “significant increase in wholesaler margins” was listed as one of several reasons behind recent hiked generic prices in a report by the National Audit Office published in June 2018. The problems with generic pricing and ‘stock availability’ over the past year or so were so significant that the Parliamentary Public Accounts Committee has launched an inquiry to investigate the problem.

But while large multiples may go unaffected, the news that the DHSC plans to recoup the sums it believes it ‘overpaid’ during the generic pricing issues in 2017 — by imposing an additional clawback across the board — could be the final straw for some independent contractors. The clawback will affect all contractors ‘equally’ (pro rata), but it seems very unfair for an independent to pay back a proportion of funds when it had no control over wholesaler prices in the first place. They were out of pocket when trying to source drugs subject to price concessions and they will now suffer an additional clawback for a situation over which they had no control.

This situation is compounded by community pharmacy funding for 2018/2019, which will be maintained at £2.59bn — not the £33m cut that was expected, but effectively a funding cut in the context of inflation and increasing workload.

As suggested in the DHSC’s 2016 impact assessment, smaller independent pharmacies may struggle to offset any funding problems with retail sales or other services. Larger chains are unlikely to face such catastrophic results, particularly those with significant non-dispensing income streams.

The government has other options. We need to move away from a system in which dispensing volume still attracts the bulk of contractual remuneration and towards an integrated model for pharmacy services across primary and secondary care, with trained and empowered pharmacists and technicians providing effective pharmaceutical care for both acute and long-term conditions. In May 2018, the Pharmacists’ Defence Association launched ‘Wider than medicines’, a strategy to achieve this system.

A group practice model — in which pharmacists across the sectors work together — and a contract that rewards pharmacists for providing clinical services from community pharmacy premises, as suggested by the Murray review, would provide patients with quality care closer to home and support smaller independent pharmacies. These developments will make the best use of pharmacists’ unique skills and empower patients to get the best from their medicines.

There can be a better future for both patients and pharmacy, but this can happen only with changes to the medicines supply function and a new approach to care.