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The Pharmaceutical Journal
Vol 273 No 7325 p713-714
13 November 2004

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Letters to the Editor

New contract

Contract 2005

Need for return on investment

PSNC has blown it

Need for return on investment

From Mr N. Baumber, FRPharmS

According to last week’s Broad spectrum article (PJ, 6 November, p678), 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.

What is the point of trying to encourage ownership, presumably by aspiring independent pharmacists, when neither the old contract nor the new one recognises the need to fund a sufficient rate of return on the necessary investment through pharmacy income, if you do not have recourse to the Stock Market for financial backing? The major companies have things going nicely in their direction and have never agreed to anyone looking closely at the ownership issue because it might affect their share of the global sum.

Noel Baumber
Grantham, Lincolnshire

MIKE DENT, head of finance, Pharmaceutical Services Negotiating Committee, replies:

As reported elsewhere in this publication (p705), the PSNC is advising contractors to use the figures calculated by North East London Local Pharmaceutical Committee with caution. The methodology used could be misleading because it may encourage contractors to compare current income including buying profit with new contract figures that do not include it.

Funding for the new contract was developed on an evidential basis. This included a programme of work aimed at ensuring that pharmacy income delivered a fair return to independent contractors. This work was developed in collaboration with leading financial analysts and was based on independent pharmacy costs, business risk and capital structure. It therefore reflects fully the return required on a contractor’s investment in community pharmacy and played a major part in ensuring that a successful outcome to the negotiations was achieved.

PSNC has blown it

From Mr P. R. Dishman, MRPharmS

As far as I can see the contract increases our workload while paying roughly the same money. This is in total contrast to the doctors’ contract, which gave them a 30 per cent pay increase and better conditions.

I think all the paper chasing (aka clinical governance) is a waste of time and effort, since both Shipman and the Bristol heart surgery cases were the responsibility of the medical profession and not pharmacy.

The Pharmaceutical Services Negotiating Committee should have negotiated an increase in pay to compensate us for the extra time and effort involved in carrying out government diktat.

The Government desperately wants us to run repeat dispensing. This was a once-in-a-lifetime chance because the PSNC had the Department of Health over a financial barrel but, predictably, the PSNC has blown it. There is no increase in pay for the extra workload. Our only chance would be to throw the whole thing out and order the PSNC back to the negotiating table, but inevitably the block votes of the multiples will push it through.

Just to put the tin lid on it, the Royal Pharmaceutical Society seems to have precipitated a manpower crisis by banging the fees up so there will be no chance of a short-term locum for illness or emergencies. I will have to get the assistants to prop me up in a corner if I am ill and let them get on with it.

Roll on retirement!

Paul Dishman
Exeter

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