The Pharmaceutical Journal
Vol 270 No 7233 p113-114
25 January 2003

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Letters to the Editor

OFT Report

We need a new contract, not an open one

From Mr A. R. Korsner, MRPharmS

I have read and seen much in the media about the Office of Fair Trading report. I have been embarrassed at the apparent way in which community pharmacists have been depicted as operating a "cartel" against patients to keep prices to consumers elevated and how interested companies are being kept out of the market.

What I have neither read nor seen is any reference to the reasons why contracts were restricted in the first place and what price was paid to get them restricted.

The Department of Health is not known for giving without reason and although it seems a long time ago, if I recall correctly, the DoH thought that the potential for too many pharmacies was increasing its cost of providing the service. Also, good evidence was provided that more pharmacies meant, among other things, fewer items per pharmacy and thus less stock (bad for patients), smaller, more expensive packs and higher broken bulk claims (bad for the Government), plus less ability and incentive to offer a good professional service (bad for patients again).

What has changed? Although a restricted contract was of benefit to the DoH, community pharmacy, nevertheless, was made to pay heavily for it. The loss of on-cost was a substantial price to pay. A dramatically reduced professional fee topped up by a basic practice allowance — which many doing fewer prescriptions did not get — was grossly unfair to small contractors. I trust we will revert to the "item of service" method of payment, lose the basic practice allowance and once more have the iniquitous zero profit element removed from the equation forever, with on-cost reinstated. I seem to remember that this was the time that cost enquiries went too. We were told that the basic practice allowance was in recognition of advice and "being there". There cannot possibly be a basic practice allowance with an open contract, can there? How could it stand up financially?

A fair payment for a job well done looks ever more attractive, providing that our negotiators are not allowed to forget what we paid for to get what we now have. It is not an open contract we need, but a new one that takes account of just what it costs to provide a service, earn a living and pay tax. If our negotiators are up to the job, the OFT, by stirring a can of worms, may hopefully have done to the Government what it appears the Fire Brigades Union might have done to themselves.

Adrian Korsner
London N20

Why are we treated with such contempt?

From Mr F. R. Bayliss, MRPharmS

January has come with a double whammy for the chemist contractor. The annual kick-up-the-pants for working too hard last year is followed by the bombshell over deregulation.

If my memory serves me correctly, chemists were advised to accept a new contract in 1987. The new contract promised limitation on future openings in return for the abolition of on-cost (a system whereby a small percentage mark-up was added to the cost of drugs supplied). On-cost gave us a sporting chance of paying the interest on money borrowed from the bank to pay our wholesalers while we waited for the Government to cough up our National Health Service cheque. The new contract was a quid pro quo. Removal of the quo should surely justify handing back the quid.

I deeply deplore the efforts of a minority to impose a return to the free-for-all in pharmacy location, to the detriment of the whole profession. A return to leap-frogging will affect every chemist shop whether part of a multiple or privately owned and should be vigorously opposed. A pharmacy that has served a community for generations can suddenly find that the house next door has been turned into a non-retail pharmacy to poach all the prescriptions — is this what we want?

With regard to the £4m clawback — one wonders what Andy Gilchrist would say if his members were told that they had put out too many fires in 2002 and a pay cut was justified. Can you imagine the consequences if the train drivers' union was asked to pay back money already earned because their quota for passengers had been exceeded?

Why is it that pharmacists are treated with such contempt by our political paymasters?

F. R. Bayliss
Cuckfield, West Sussex

Supermarkets and multiples could lose out

From Mr R. S. Patel, MRPharmS

I read with great interest the commentary in various broadsheets regarding the broad deregulation of pharmacy contracts recommended by the Office of Fair Trading's John Vickers.

I currently operate a group of four independent pharmacies in Surrey. At first, my initial response to the OFT inquiry was shock and fear — fear of supermarkets and large groups that might force me to close my business.

However, after putting my business hat on, I started weighing up the threats and opportunities of this proposed new "open market". Many commentators and indeed bodies representing small independents are of the view that the main financial beneficiaries of this new proposal will be the supermarkets and larger groups. I, however, would like to offer a different perspective.

Supermarkets and larger groups often, if not always, operate from static locations. The de-regulation would mean that they could now offer pharmaceutical services from stores that currently cannot offer such services.

Currently, if I were to acquire a pharmacy I would only be able to buy an existing business with all the expense that that entails. If the Government decides to implement the recommendations of the OFT, it would mean that I could open up a new pharmacy only yards away from a busy surgery or indeed within a surgery for only a fraction of the cost. Hence my return on investment would be extremely high.

The scenario would then be: why should consumers travel to supermarkets to fill their prescriptions when they are only a few minutes from obtaining their dispensed medicines after seeing a doctor? Who would be the winner in this new open market? Surely the supermarkets would end up losing the market share since they will no longer offer "convenience" (a word they like to use a lot).

Rajive Patel
Superintendent Pharmacist and Director
Infohealth Pharmacy Group

A new generation of independents

From Mr B. J. Hewitt, MRPharmS

With the doubtless further expansion in pharmacy numbers, the decision to make an aggressive stance on devaluing the profession to £17 per hour for locums by certain multiples seems rather foolish. If not foolish than certainly poorly timed since when a greater variety of work is available, who would work for companies that previously tried to threaten their livelihoods?

The Office of Fair Trading report also gives a chance for young pharmacists to obtain their own businesses, having been priced out of this option for too long. Let us hope we will see a new generation of independents alongside the multiples to show them how it is done.

Ben Hewitt
Nottingham

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