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Jignesh Patel, Imran Khan and Alan
Castell are vice-chairmen
of North East London Local Pharmaceutical Committee
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Like most community pharmacists, we have high hopes for the new contract.
We hope that it will be fair, that it will support professional and business
aspirations by developing services that meet local community needs, and
that it will support the long-term financial needs of the network. Now
that we have read the Pharmaceutical Services Negotiating Committee’s
booklet and the Department of Health’s document, “The new
contractual framework for community pharmacy”, we are delighted
by some of the areas covered. However, we are concerned and disappointed
by others. It has become apparent to us that some people who were looking
for a new dawn will actually see a dusk: an undignified exit from their
pharmacies as a result of betrayal by their trusted negotiators.
However, first, let us examine the good things in the contract. It has
two main strengths. First, the quality agenda and patient safety are
now formally embedded in the core practice of dispensing prescriptions.
Second, there is a regularisation of the uncovenanted profit to what
is now termed “profit on purchasing”. This puts finances
on a more secure basis but, despite what the PSNC says, there does not
seem to be any money — just newly labeled money.
Quality of service will improve as a result of requirements for clinical
reviews of prescribed medicines, inclusion of patients in their reviews,
accreditation of service providers and premises, requirements and standards
for consultation rooms, reduced medicines wastage, working with GPs to
manage chronic conditions, repeat dispensing, introduction of near patient
testing, and improving patient safety by prescription intervention schemes.
But these services have cost factors which will need to be monitored
to ensure that there is no under-funding and cross-subsidy from other
areas of activity. There will also be “significant additional regulatory
burdens on contractors”.
There is also more good news for those who want strategically important
IT links. To be able to participate in electronic transmission of prescriptions
(ETP), to communicate electronically with other members of the primary
care team and to access the NHS Care Records Service, pharmacies will
be required to use a National Programme for Information Technology in
the NHS-compliant pharmacy system, which will need to be connected to
N3, the new NHS national network. The costs of the new IT which will
be required to deliver the contract will be met by the NHS and while
pharmacies continue to provide an ETP service they will receive an allowance
for maintenance and connectivity.
On the financial side there is an agreed formula with a number of components
for funding the pharmacy contract. Reviews will take place at three-yearly
intervals as to whether a new cost inquiry is needed. Agreement has also
been reached to ensure that the levels of supply chain profit reflect
independent contractors’ ability to secure those levels. This means
that vertically integrated chains will see an advantage in retaining
profits untouched by discount inquiries in the wholesaling arms. The
DoH will remove £300m from retained purchase profit by reducing
Drug Tariff generics reimbursement prices. This money will be used to
fund the new national contract, ie, not for locally commissioned enhanced
services. The Government’s express objective of paying pharmacies
as closely as possible what they pay for the medicines they dispense
under the NHS is now truer. The reliance of pharmacies on purchase profits
has been recognised by the DoH and thus money released from a reduction
in reimbursement prices for generic medicines will be used to contribute
to funding the new contract.
There are three levels of contract: two in the national framework (essential
and advanced) with nationally negotiated payments and, discretionary
to primary care trusts, the local enhanced level. This means that PCTs,
some of which have insufficient resources, will determine whether or
not a service is required and how much to pay for it. All pharmacies
will have to provide essential services and, in the first year under
advanced level services, there will be an opportunity to provide a maximum
of 200 simple medication reviews if the accreditation is obtained.
The down side
On the down side, our analysis of 20 pharmacies indicates that there
will be less income from the nationally negotiated fees in the future
than from the current arrangements. An average pharmacy dispensing
5,000 items per month with a 25 per cent margin will see a reduction
in overall profit margin of 3.45 per cent to 21.55 per cent, which
is equivalent to a 13.8 per cent decrease of the margin. In hard cash
this amounts to £30,983 for the year. Since the PSNC has not
provided contractors with a tool to calculate and compare their existing
and future incomes, we are publishing our own tool on the internet
(see www.nellpc.org.uk).
Our model indicates that there is no new money, just reduction and
redistribution.
For small contractors the future appears dire. Various ministers’ proclamations
that the new contract will reward quality not quantity are unjustified.
Those with the spare capacity to improve pharmacy contribution to meet
the challenges of the modernisation of the NHS and meet local needs are
going to be penalised. Those dispensing fewer than 2,000 items a month
will have to forfeit up to £20,000 a year.
In para 3.1 of the DoH framework document it says: “All contractors,
large and small, depend at present on profits from purchase of medicines
dispensed for the NHS to supplement the global sum income. This income
source is substantial, but was not recognised under the present arrangements.” It
is not recognised in the new contract either. All other contractors are
benefiting from the change in “recalibration of the Drug Tariff”.
This is not only discriminatory but also anticompetitive because it raises
barriers to entry.
If unchallenged this will lead to reduction in the number of pharmacies,
especially independents. With profits retained in the wholesaling arms
of the vertically integrated companies and cheaper sources of money on
the market, we should now expect a buying surge of large pharmacies in
private hands. The combined impact will be the reduction in the independent
sector to a level which within three to five years will be less than
30 per cent of total pharmacy numbers. Consequently, after transferring
financial power, market conditions will force changes in the political
power at national and local level. Community pharmacy’s future,
but possibly not the profession’s future, thereafter will be in
the hands of accountants and the Stock Market. And many independents
will see a demise without dignity.
The PSNC booklet was received by contractors just before last weekend.
The ballot closes on the 22 November, which is less than three weeks
away. No one outside the PSNC or DoH had seen the service specifications
or the contents before this. This certainly cannot be described as open
government or inclusiveness; indeed the Society still has to work up
standards for services. This is unacceptable. What is going on in our
opinion is a series of Machiavellian moves to get an agreement from contractors
before the regulations come into force. The contractor’s ballot
is one hurdle but the other is the regulations, and no one should think
that the ballot result alone will finalise the contract. If people want
the contract to change before the regulations come into force, they must
lobby their MPs and PCTs about changes that they are sure will better
serve the public.
We believe success in professionalism and business is built on relationships
that are founded on trust. It works because of clear communication and
co-ordination of action, supported by solid values. The PSNC has betrayed
contractors. The minister has failed to deliver on the Vision for Pharmacy. |
The
Pharmaceutical Journal