The Pharmaceutical Journal
Vol 273 No 7326 p743-746
20 November 2004

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· New contract (12)
· Apothecaries
· Overseas members
· Preoperative association
· Boots the Chemists
· Levothyroxine
· Complementary medicine
· Retention fee
· Preregistration exam

Letters to the Editor

New contract

A charter for the multiples?

From Mr N. Baumber, FRPharmS

Comparison of income between the old and the new contracts is not so easy, especially since no one seems to keep track of where the money goes across the six contractor groups needed for comparative purposes. Under the old contract it was almost impossible to work out just how many pharmacies there were, what percentage of prescriptions were dispensed and how much of the global sum ended up in each group.

My analysis in 1996 (PJ, 1 February 1997, p174) showed that the majority of pharmacies (54 per cent) were sustained by only 35 per cent of the global sum. Annual increases paid out in relation to prescription volume (through an increased dispensing fee) only allowed one-third of any new money to filter through to the lower 56 per cent or so of contractors. Nearly half of the money in the global sum went to the busiest 25 per cent of contractors.

What I find devious in the new contract is the increased number of fee payments related to prescription volume. The old dispensing fee paid out 66 per cent of the global sum, but it is now disguised as an item fee plus a practice payment and other volume-related payments, too. The average of all volume-related fees as a percentage of total fee income becomes 79.93 per cent and as high as 88.79 per cent for those dispensing 12,000 items per month, the median probably being around 84 per cent. If that is the case, static monthly payments, equivalent to the old professional allowance, could then drop to 16 per cent.

Steve Williams, a member of the PSNC negotiating team, tells me that the new volume-related practice payments will be funded from the £300m lopped off generic medicines reimbursement. This potentially adds to the old global sum (£800m) plus new money (£166m) to give a larger pot of £1.266bn (leaving aside £500m to be paid out in the acquisition of new services). Unless prescription distribution has changed radically since 1996, the top quartile could now receive around £540m (42.7 per cent of £1.266bn) under the new payment system. The least busy 50 per cent of contractors would then receive around 31.8 per cent of the larger pot. It seems then, that there is no clear equivalent of a global sum for the dispensing part of the new contract.

Primarily, the effect of this change in the mechanism of distribution is to make around 84 per cent of all fee income available to those who can attract prescriptions through their door (rather than 66 per cent), which is a skew of 18 per cent. This affects the distribution of funds and takes money from the bottom 50 per cent of contractors by reducing “front-loading”. Any future increases paid out through volume-related fees will also vanish more rapidly up the scale to busy pharmacies.

Secondly, the volume relationship has intensified, global sum money has become (in my view purposefully) more volatile and worth the effort of attracting more prescription business. It is more important to hang on to patients and prescriptions than ever. With the advent of electronic transmission of prescriptions and internet pharmacy that competition and volatility will be keenly felt.

Thirdly, to a large extent, service levels also relate to prescription volume and the patients who go with them, so although there may be money obtainable from primary care trusts over and above the new global sum, this income will also be affected by any substantial loss of prescription business.

We certainly need more transparency and more published information on prescription and pharmacy distribution to allow a better economic analysis of the internal competition between pharmacies, but we are not likely to get it with political control now in the hands of the multiples.

Noel Baumber
Grantham, Lincolnshire

PSNC should get its sums right

From Mr A. R. Korsner, MRPharmS

I note the Pharmaceutical Services Negotiating Committee’s warning to pharmacy contractors to “get their sums right” (PJ, 13 November, p705). I also note on p703 of the same issue, that Steve Dunn, managing director of AAH Pharmaceuticals and hence Lloydspharmacy, who should know a thing or two about costings, considers that the renegotiated Pharmaceutical Price Regulation Scheme will cut pharmacy profits. He explains how pharmacists will have to do more work for the same money under the suggested new contract (ie, there will, effectively, be no new money). He says there will be increased overheads and estimates that the combined effect of the PPRS and the generics changes could reduce average pharmacy profits by £4,000. Personally, I think it is a conservative estimate.

This being the case it looks like it is the PSNC that needs to get its sums right.

Why is the PSNC pushing for acceptance of this contract? The tool for calculating profits offered by North East London LPC to its contractors (PJ, 6 November, p678) may not be entirely correct (as stated by Mike Dent the new head of finance at the PSNC). The NEL LPC never said it was, but it will certainly be close enough to indicate to a contractor whether the new contract will benefit or adversely affect them. Using this tool is entirely preferable to sitting back and taking the PSNC’s word for it that they will benefit.

Regrettably, on past performance with a whole range of decisions (like the recent period of treatment fee and past loss of on cost, etc) it seems to me that contractors will be better served by the NEL LPC tool. The speed at which the PSNC seeks a decision from contractors does not parallel that of the British Medical Association when the GPs were negotiating their contract. Given time, pharmacy contractors would, like GPs, be able to turn down an inappropriate offer and push for something better. It worked for the GPs. The PSNC should allow time for a proper decision. A mistake at this time could destroy the lives and livelihoods of moderate to medium contractors and decimate the community pharmacy service to patients.

Adrian Korsner
London N20

A slap in the face for small independents

From Mr M. K. Maron, MRPharmS

I would like to express through your column my disgust at the terms of the new contract. What a shock I had when I read the conditions of payment for pharmacies dispensing fewer than 2,000 items a month. How could the Pharmaceutical Services Negotiating Committee have let so many of us down so badly? This is a slap in the face and an insult, not only to the 100 independent pharmacies affected but also to all of pharmacy. Pharmacists like myself, who have worked a lifetime for the NHS, now face a bleak future.

I condemn the decision of this pusillanimous PSNC. Stand up to the health minister, Rosie Winterton! Give your colleagues more respect and more thought on its implications! It is not necessary to sell your fellow professionals down the river. My staff and myself work devotedly for all our patients. Surely a pharmacy doing 1,600 items a month should not be closed down to satisfy some Whitehall pen-pusher’s statistics. I shall certainly not be voting for this lamentable new contract.

Manuel Maron
Staines, Middlesex

Daylight robbery?

From Mr H. Patel, FRPharmS

Pharmacists should not worry about a general election interrupting implementation of the community pharmacy contract (PJ, 13 November, p723) because it is unlikely to take place before May 2005. Even if the election does take place before May, work done on the new contract would not be wasted. In fact, delaying implementation until after the election would present an opportunity to iron out points with which we are uncomfortable. I believe the rush to vote on the contract has been designed to stop in-depth discussion about the details of the contract and its financial implications.

The Pharmaceutical Services Negotiating Committee has not provided contractors with a tool to compare current and future incomes. The lack of such a tool means that contractors are being asked to vote blindly and on faith. But financial pictures are vital to enable contractors to vote in an informed way. For democracy to work people must have clear, unambiguous information within a reasonable time. It is not too late for the PSNC to provide tools that it is happy with but it is unhelpful to complain about the tool that the North East London Local Pharmaceutical Committee has provided (ibid, p705) and do nothing. Indeed, failure by the PSNC to specify “the errors” suggests that there are no errors in the North East London Local Pharmaceutical Committee’s tool (PJ, 6 November, p678).

Another factor likely to impact on contractors’ future income is the announcements on the Pharmaceutical Price Regulation Scheme (ibid, p703). I am concerned about the PPRS agreement. First, discounts obtained by pharmacists will come down. Second, parallel imports into the UK will dry up because of an EU decision to allow a fixed quota for each member state. Combine this with the fact that the 7 per cent decrease in prices that the new PPRS demands will not be spread around the whole portfolio of the pharmaceutical industry but across a much smaller range of products that are susceptible to parallel importation, and the result is that profits from purchasing parallel imported drugs are likely to be smaller than previously estimated.

There is also considerable uncertainty among contractors about increases in overheads as a result of staff training and these staff demanding higher wages as a result. There is also the cost of the consultation area and loss of revenue from the decrease in the sales area to be considered. Is there a notional salary for the pharmacist, or has that concept been abolished?

There are further concerns about distribution of the global sum and other income across the different prescription bands. The PSNC has not made that information public. Pharmacists need to know of any changes taking place in the overall distribution of monies year on year. It appears from a preliminary examination that the PSNC is moving money from the bottom end towards the top end. It appears that the front-loading element has been reduced and spread to those pharmacies dispensing more than 2,500 items a month. This results in robbing smaller contractors to pay the others.

Finally, contractors dispensing under 2,000 items a month are, it appears, to be abandoned. The exit payments of £18,000 are derisory and are an insult to those who have committed themselves to serving their communities. How can anyone dispose of a lease, pay redundancies, offload stock at discounted prices and pay legal costs from such a miserly sum? It is claimed that local pharmaceutical services (LPS) schemes will save them. But LPS schemes depend on the generosity of primary care trusts, since they are the main source of LPS funding. PCTs are already facing financial problems. Their money must follow identified health priorities. So it is disingenuous to suggest that LPS monies will save the pharmacies in the danger zone.

What is on offer here is a volume-based contract with more investment and more work — but with less money.

Hemant Patel
Secretary
North East London Local Pharmaceutical Committee

Left shocked, angry and resentful

From Mr K. C. Patel, MRPharmS

I went to one of the Pharmaceutical Services Negotiating Committee new contract roadshows for pharmacy contractors at South Mimms. The room organised at the Holiday Inn was too small for the number of people who turned up, with about a third having to stand at the back because there were not enough chairs. There was no PA system organised and hence the discussion and presentation were hardly audible to the people in the back half of the room. When contractors protested about the “shambles” of the organisation, they were promptly told by Sue Sharpe either to be quiet or to come back in the afternoon. Such arrogance displayed towards contractors, who had given up their Sunday to attend an important meeting, left many shocked, angry and resentful. A lot of them departed but, for those who stayed behind, we were given the impression that a “no” vote was not the way forward. I am still unclear about how the new contract has any new monies but there seems to be a lot of new work.

I am now beginning to get the distinct impression that the PSNC is displaying the same arrogance in asking the contractors (and I believe it is the independents, because the multiples are expected to vote “yes”) to vote on an incomplete package in a short period. I am convinced we are heading towards a contract that will deliver a lot more work with little or no rewards. In comparison the GPs voted “no” to their contract the first time round and then were awarded a minimum income guarantee at the second ballot. However, seven months into the GMS contract they are still unhappy about the amount of work that is involved. Let us learn from them and have the courage to say we need more time and a lot more transparency. The PSNC gives the impression that there is no going back on this “deal”, in which case it is failing in its fundamental duty as a negotiator.

K. C. Patel
Luton, Bedfordshire

Roadshow farce

From Mr G. Taylor, MRPharmS

It is not rocket science to work out how many contractors, and pharmacists, there are working in London and the Home Counties who will want to attend the Pharmaceutical Services Negotiating Committee roadshow at South Mimms on a Sunday morning.

Given a choice I would estimate an overwhelming majority would prefer Sunday morning to Sunday afternoon. The alternative evening session, starting at 7pm, is a joke.

To book a room that holds about 100 when approximately 200 show up shows an incredible lack of foresight. Not only was the room too small and too hot but lack of amplification meant it was impossible to hear at the back of the room.

The arrogance of the PSNC officials also leaves a lot to be desired. Knowing that they have made a mistake they were not prepared to stop the meeting for a short while to make it more comfortable. Comments like: “If you want to hear you’ll have to be very quiet” and “We’re going to continue and finish this meeting regardless”, do not go down too well. The PSNC would do well to remember that the roadshows are for the benefit of pharmacists and not themselves.

Let us hope the PSNC’s negotiating skills are better than its organisational skills. Along with many others, I did not stay to find out.

Geoff Taylor
Welwyn, Hertfordshire

Promises today about jam tomorrow

From Mr S. S. Kalsi, MRPharmS

Not so long ago a budget was presented that elicited a response from the floor of the house of “promises today about jam tomorrow”. One cannot help but feel similar thoughts about primary care trusts funding the proposed enhanced services with funds “saved” from drug price reductions.

An analogy that comes to mind goes like so: it is very much like directing an English farmer to Ethiopia to sell his produce and the Government claiming that it has fulfilled its duty to support English farmers. Ethiopians certainly have the need for the produce but have no money to pay for it. But the responsibility to support the farmer is claimed to be fulfilled so the exercise is simply to shift burden of blame to someone else.

Asking local pharmaceutical committees and pharmacists to go to PCTs would be a useful exercise if the PCTs were given specified funds, at least in the first few years, or there were a national pot from which the monies could be drawn to meet the local provision of pharmacy services. The Department of Health 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 the locally commissioned enhanced services.

Leaving development of pharmacies to PCTs and ignoring local vagaries is not a responsible way to develop community pharmacy.

Surinder Singh Kalsi
Ilford, Essex

Support for disabilities — procedure seems unnecessarily long

From Mrs C. L. Higgins, MRPharmS

The Contract 2005 article describing “support for people with disabilities” (PJ, 30 October, p646) has prompted my first letter to The Journal. As a pharmacist who had to retire from community pharmacy work 13 years ago due to progressive systemic lupus erythematosus, I considered the proposals from “both sides of the counter”. There are several aspects that I find worrying. As a person with disabilities that are not obvious, I have found that to achieve help, a disabled person usually has to make the first move — and then there also seem to be interminable hurdles to overcome. It takes confidence to make the first approach and then persistence to pursue the issue, often feeling vulnerable.

I realise that there have to be national guidelines and systems but I would request that some thought and sensitivity could be given to the way patients with disabilities are treated. It often takes a huge effort to ask for help and, as in my case, symptoms can be variable and unpredictable. Scoring methods should take this into account if possible. Referrals and decisions for eligibility ought to be made as quickly as possible — ideally immediately.

As in the illustrated case study in the article, there must be support schemes already in operation around the UK. Yet I realise that there are other community pharmacists who do not have the time or resources to offer the help I urgently needed during a recent flare-up, ie, over a dozen forms of medication to be removed from blister packs into a multi-compartment compliance pack. The proposed procedure for form-filling, achieving certain scores and then referrals to primary care trusts seems to be unnecessarily long-winded in what are often situations of immediate need.

Surely there is a place for following guidelines yet giving the support required at a specific time for people with disabilities — acknowledging their vulnerability, while maintaining their total acceptance and uncompromised dignity in society as a whole. Perhaps there could be a role for local advisers who have some experience of disability themselves.

Christine L. Higgins
Carnforth, Lancashire

What about pharmacy oxygen contractors?

From Mr C. J. McKendrick, MRPharmS

Amidst the deafening backslapping and self-congratulations at the Pharmaceutical Services Negotiating Committee at the outcome of the new contract negotiations, and the near universal cries to vote “yes” in the pharmacy press, let us not forget that lone small voice in the wilderness, which seems to have been forgotten or ignored in all the new age optimism.

I am talking about the pharmacy oxygen contractor. It is all very well for the PSNC expecting pharmacy oxygen contractors not to do anything precipitous like unilaterally withdrawing services, since it may jeopardise the results of discussions between the PSNC and the Department of Health but, to be frank, this issue should have been wrapped up with the rest of the new contract negotiations.

The PSNC said that it was not going to be rushed into agreeing to the new contract, it was better to get it right than meet an artificial deadline.

The problem is the PSNC has not got it right. You cannot accept a new contract until all the outstanding issues of the old contract have been resolved, and the huge gaping wound in the fatally flawed old contract is what is going to be done with respect to the pharmacy oxygen contractors. There are unresolved issues over compensation for headsets and equipment and the so-called “lost cylinder” issue which, for some, could cost them a five-figure sum.

I urge the PSNC to postpone the forthcoming new contract ballot, until these outstanding issues have been satisfactorily resolved. The new contract is the right way to go for the profession, but if the ballot is not postponed I will be voting “no” and would suggest that all other oxygen pharmacy contractors do the same since it is the only course open to us (unilateral withdrawal of services would not only harm our patients but also our reputation). It is better to get this issue right than be rushed to meet an artificial deadline.

Chris McKendrick
Swindon

All independents pharmacists should vote no

From Mr A. D. Castell, MRPharmS

It is a peculiar aspect of our contract that one party, the Secretary of State, has absolute authority to change the specifications and payments at any time for any or no reason, granted by NHS (Pharmaceutical Services) Regulations 1992 18(1).

He does not have to consult (though he does) or negotiate (though he often seems to go through the motions of doing so). The new contract will require amendments to this legislation, incorporating new terms of service but I would put my shirt on the clause allowing the Secretary of State absolute authority remaining unchanged.

The published terms of the new contract shows that a new price has been agreed and the arrangements for distribution determined. We are being urged to accept the contract because there is no alternative and the new terms are non-negotiable. They may indeed be so but they are not unchangeable by Regulation 18(1). Everything within the Drug Tariff: drug prices, discount scales, fees, allowances and thresholds, is subject to the command of the Secretary of State. The terms of service themselves will be subject to scrutiny and review by both houses of Parliament before new regulations can be enacted. So contractors should not think that either what they see is what they will get or that they are impotent to affect the changes proposed. All the facilities of public debate and lobbying will be available despite the ballot result. Such lobbying will be helped if the ballot result is close. I would therefore urge all independents pharmacists to vote “no”, to register their concerns in a meaningful manner and reject the fatalistic mindset being wished upon them.

Alan Castell
Hornchurch, Essex

A lack of compensation

From Mr C. H. Michaels, MRPharmS

There is little doubt that the new contract admirably addresses the aspirations of the profession and provides a path towards our integration into the primary care team. We should acknowledge with gratitude the hard work contributed and commitment displayed by the Pharmaceutical Services Negotiating Committee on our behalf.

However, there seems to be a lack of compensation for the considerable extra workload involved in the creation and maintenance of new standard operating procedures, clinical governance and recording of continuing professional development, together with skill mix developments. There appears also to be little, if any, recognition of the cost of capital expenditure, which for many of us involves extended financing and personal risk.

One must hope that the remuneration tables illustrated by the PSNC do not exhaust the purchase profits available to a discerning buyer and allow the margins that have underpinned commercial viability in recent years to be maintained. Only time will tell if the new contract can reward us adequately in our expanding role.

Coll Michaels
Watford, Hertfordshire

Additional burden placed on pharmacy contractors

From Mr J. Patel, MRPharmS

The “new contract” places an additional burden on pharmacy contractors as follows (page numbers mentioned relate to the PSNC document “The new contract for community pharmacy 2004”):

· Compliance support to disabled patients including aids which require investment of time and equipment (p5, p48, p29[3.3])
· Signposting (p5)
· Formal medicines use review (p7)
· Formal prescription interventions (p7)
· Consultation area (p7)
· Minimum dispensing support to receive practice payments (p12)
· Increased opening hours (until at least 6pm unless opening for six days a week [p19])
· Possible forceful extension of opening hours if the primary care trust deems it necessary (p19)
· Competition through changes in control of entry (p20)
· Appropriate training to undertake essential service 2 (repeat dispensing) (p23[3.1])
· Waste to be separated between public’s unwanted medicines and pharmacy’s own out-of-date medicines (p24[3.1.6]). Extra responsibilities placed in separating aerosols, Controlled Drugs and liquids (p24[3.1.3])
· Recording of interventions (p26[3.1.3])
· Recording of PCT campaigns requiring advice (p26[3.2.2])
· Participation in annual surveys (p31[2.1.3])
· Repeat dispensing transition payment equivalent to about 5 per cent of total income (p42)
· Loss of £300m in the form of “payments from PCTs” (p11) — this will disproportionately disadvantage independent (see example below)
· Loss of oxygen contract (not mentioned)

Based on the PSNC’s new contract prospectus, if the global sum had increased at about the rate of inflation (to £820m), I estimate that current payment would amount to £1,620m to provide current services (£1,720m less £100m for repeat dispensing) (p11). Under the new contract, payment for essential services amounts to £1,569m (£1,669m less £100m for repeat dispensing), out of which PCTs might require contractors to fund disposal of unwanted medicines since it is prerequisite to essential services, yet under PCT responsibilities (p25) — no mention is made as to PCTs being financially liable out of their own budgets. I suspect that this will probably come from the £300m allocated to PCTs from the contractors purchase profit. Hence contractors will be at least £50m worse off. (This will go some way to paying for contractors’ IT needs.)

This figure will get bigger as the years go by since the purchase profit, although recognised, has not been crystallised into an actual figure and there is no published method for working it out. Now the question arises that if the Department of Health can raid contractors’ purchase profit pot today to the tune of £300m, what is there to guarantee that this activity is not repeated in years to come? For the security of contractors, the so-called purchase profit needs to be a definite figure which can be substantiated with evidence and is fairly distributed among all contractors — not just the bigger ones.

Another issue is the exit payment. Why is it only available for the first year of the new contract and why such a meagre figure (p13)? Has the implication of a lease been taken into account? And what about the redundancy rights of the employees?

The whole new contract is still wedded to prescription numbers. This is in stark contrast to the GPs, whose burden of managing repeat prescriptions will be reduced by pharmacy contractors (p23[2.3]), and who are being given rights to opt out of providing 24-hour care (p19).

In addition to all of this there are further burdens placed on contractors by other sources, such as the Royal Pharmaceutical Society (standard operating procedures and dispensing staff training), the Medicines Act (requiring the presence of a pharmacist in the pharmacy) and the Disability Discrimination Act provisions.

Taking the above on board, only fools would support such a contract.

Jayvant Patel
Brentwood, Essex

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