The Pharmaceutical Services Negotiating Committee has issued guidance notes for pharmacy contractors considering setting up consortium pharmacies, together with model memorandums and articles of association. The guidance was sent to local pharmaceutical committees.
It has been produced by the PSNC in response to a resolution passed at the LPC representatives' conference last year (PJ, March 13, 1999, p375).
The PSNC says that applications for consortium pharmacies are likely to occur when a new medical practice or health centre has been established in such a way that it will affect the patients using a number of existing pharmacies. The owners of the pharmacies affected might wish to establish a pharmacy at or near to the new medical facility by setting up a consortium. The pharmacy might be a new establishment or be formed by a minor relocation of one of the pharmacies in the consortium. Alternatively, the consortium might be "defensive", that is, formed to prevent an application for a new pharmacy being made from outside the locality.
The PSNC notes that many pharmacy contractors "will naturally be reluctant to be drawn into an application to set up a consortium pharmacy" after years of local competition, but that others might feel that "the consortium approach close to the surgery represents a large part of the future of the profession".
Two drawbacks to consortium pharmacies are noted. First, that the number of prescriptions dispensed by the consortium pharmacy is unlikely to exceed the total number lost by the existing pharmacies, so that the consortium members will have additional expense without additional income. Secondly, that the consortium pharmacy will distort the distribution of prescription numbers in the area, as it is likely to be dispensing a higher number of prescriptions than any other pharmacy in the area. Due to the way in which the professional allowance operates, the income per prescription in the pharmacy will be less than in the other pharmacies. Both factors will, therefore, result in an overall reduction in the profit from dispensing, the PSNC says. In addition, there could be a loss of over-the-counter sales through existing pharmacies if the number of prescription patients visiting them fell.
The PSNC says that when an LPC finds out about a proposed surgery move or new facility it should call a meeting of all contractors likely to be affected. As soon as the proposed site and size of the centre is made known, the contractors should decide in principle whether they will apply for a contract and whether a minor relocation should be made. A company should then be formed to make an application as soon as possible.