The Pharmaceutical Journal
Vol 270 No 7233 p112
25 January 2003

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OFT report overlooks the fact that pharmacy is an integral part of the NHS

By Jonathan Buisson

The Office of Fair Trading has spent over a year looking at the pharmacy market as part of its study of the control of entry regulations. Given the starkness of its single recommendation — abolish control of entry — and the onesidedness and inconsistency of the rest of the report, one might wonder what most of this time was spent doing. Despite all this effort, the full three-volume report contains few surprises for the informed reader.

The OFT appears to have started with its conclusion and worked backwards in an attempt to justify it. Its approach to community pharmacy has been a purist one. Untrammelled free market competition is the best approach, the OFT believes, and any market can be reduced simply to a matter of supply, demand and pricing.

While the report's introduction says that it has "remained mindful of the public policy objectives of the Health Departments in the United Kingdom for community pharmacy and the supply of National Health Service prescriptions" [Para 1.2], there seems little sign of this in the rest of the text.

Despite the fact that the regulations under investigation control the right to acquire a contract with the NHS to dispense prescriptions to be reimbursed by the NHS for doing so (accounting for around 80 per cent of pharmacy business turnover), this side of the business has been largely excluded from OFT scrutiny. This is mainly because there is no price competition in this area for patients, as they either pay a set charge or are exempt from paying, so most of the report concentrates on the pharmacy sale of non-prescription medicines.

There are a number of areas where the conclusions of the OFT appear to be either at odds with what the report finds or which are difficult to support on its evidence.

• Access "The UK is currently well served geographically by pharmacies," the OFT says [Para 1.15], begging the question of its own report. In Britain, 79 per cent of the population live within 1km of a pharmacy and around nine out of 10 people find it easy to get to a pharmacy either from their home or their general practitioner. Having said this, the OFT then redefines the problem as one of opening hours rather than location.

• Cost savings "It is difficult to estimate precisely the potential benefits to consumers that would derive from deregulation, in the form of increased price and quality competition." [Para 1.12] Pharmacies have been free to compete on price for non-prescription medicines since the end of resale price maintenance in May 2001. The OFT found that, with the exception of Asda and Tesco, few have gone heavily down this route. Price is only one aspect of the marketing mix for any product and many medicines are classic distress purchases for which price competition plays a smaller part in the purchasing decision. The OFT estimates that prices could fall by £20m–£25m for pharmacy medicines and by £5m for general sale list medicines sold through pharmacies if more pharmacies opened. This appears to assume that all new pharmacies are in supermarkets and compete as aggressively on price as Asda, despite its own evidence, mentioned above, of muted price competition to date.

The OFT has looked at three markers — opening hours, consulting rooms and collection and delivery services — which it has used as proxies for "valued and innovative services". These seem to be somewhat flawed ways of measuring the quality of what community pharmacists do, or could do, for their customers. These also have a tendency to favour supermarkets over existing long-established businesses.

• Opening hours While much has been made of the "24-hour society", in reality there is much less demand for out-of-hours services than is often supposed. Established businesses have had many years in which to match their opening hours to local demand. Sole proprietors are also limited by the number of hours a single pharmacist can reasonably be expected to work. Late-opening supermarket pharmacies require additional staff, a point which the OFT report seems to ignore.

• Consultation rooms The provision of dedicated consultation rooms is a relatively recent development in pharmacy. As such, pharmacies that have been built or opened recently and designed from scratch — like most supermarket pharmacies — are more likely to have them. However, the OFT found that consultation rooms were almost as common in independent pharmacies as in supermarkets. The mere presence of a consultation room does not mean that it is being used to provide new services.

• Collection and delivery Home delivery services were common in both independent and multiple pharmacies but provided by only a third of supermarkets. Supermarkets also restricted the service to patients in need, whereas independents extended it to the majority of their customers. Collection and delivery of prescriptions may be convenient for patients, but it falls a long way short of medicines management.

As part of its investigation the OFT conducted a telephone survey of 1,000 people who had used a community pharmacy to have a prescription dispensed in the previous six months [Annex D]. This showed high levels of use of pharmacies, both for prescription and non-prescription medicines. Users also frequently asked for what they see as very helpful advice from their pharmacists.

If this survey had been published as an independent piece of research it would undoubtedly have been seen as good news for pharmacy. People seem happy with the location of their normal pharmacy and the service they receive there.

As part of the survey, pharmacy users were asked what impact the closure of their local pharmacy might have on them. Overall, one in five (19 per cent) said that it would be a real problem and a quarter (26 per cent) said that it would be a big nuisance but there were alternatives they could use.

When these figures are examined more closely, it can be seen that it is those who might be expected to use their local pharmacy most who would be most affected by its closure. More than half of those in the lowest socio-economic group (55 per cent) said that it would be either a real problem or a big nuisance. Over three-fifths (62 per cent) of those classified as disabled or infirm would have difficulties. Women (49 per cent) were more likely than men (40 per cent) to be adversely affected as would over half of the oldest age group, those over 70 years old (54 per cent). One wonders why little was made of this by the OFT in the summary report given to the media.

By studying community pharmacy in isolation from its proper setting as an integral part of the NHS, the OFT report has failed to reveal pharmacy's true value.

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