The Pharmaceutical Journal
Vol 279 No 7460 p44
14 July 2007

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Letters to the Editor

Community pharmacy

Half-understood myths

From Mr J. A. Schofield, MRPharmS

David Thomas asks the sensible question of Bharat Nathwani about his assertion that the average pharmacy contractor earns £180,000 net profit from NHS dispensing (PJ, 7 July, p16). Mr Nathwani then quotes a Department of Health publication that clearly shows the figure of £180,000 to be a gross figure.

When Mr Nathwani is discharged from hospital (once his gunshot wound to his foot has healed) I would like him to look at the Drug Tariff. He may then, with a pocket calculator, do the sums and work out how many dispensed prescriptions it would take to earn £180,000 gross. I would then direct him to the section which instructs a pharmacy contractor as to how many staff he must employ if he dispenses this number of prescriptions.

I might, for information purposes, assist him by saying that accuracy checking technicians today are earning around £20,000 a year and pension costs must be added to that along with holiday cover. He can look in the PJ or telephone a recruitment agency to ascertain the sort of salary realistically paid to a pharmacist these days and calculate the cost of locum cover for holiday entitlement and add pension costs. Mr Nathwani is attacking the multiples so it must be borne in mind that a multiple will not be an owner manager situation and the cost of a pharmacist must be factored into his calculation.

To continue his convalescence constructively I would invite him to telephone a local estate agent and ascertain commercial rental rates in the various sites that pharmacies are located.

For his further distraction and amusement he may like to speculate as to how much the other costs are in running a pharmacy, ie, indemnity insurance, buildings and contents insurance, professional fees, accountancy and legal fees, business rates, heat and light, IT, etc.

Once the costs of running the service are deducted from the gross figure he quotes, a truer picture starts to emerge. However, what is the problem? This is money paid for work done. It has been agreed between the Pharmaceutical Services Negotiating Committee and the DoH. Why the complaint? Multiples work just as hard as individuals to earn this money. They are entitled to it.

The disparity comes in the extra money multiples earn from their wholesaling activities and that they keep more of the purchasing profits that they can earn. By all means, raise this as a stick to beat them with but be careful. Their wholesaling activities are legitimate and the wholesaling arms are well run, lawful companies that also supply independents. It would be unfair to take a proportion of income from them when it is lawfully earned.

However, if Mr Nathwani continues to spout half-understood myths as part of his crusade and the purchasing prices of the multiples are those that end up in the Drug Tariff, a queue will rapidly form of independent contractor pharmacists and their staff who will happily reload his gun and pull the trigger for him. Only this time it will not be his foot they are aiming at.

J. A. Schofield
Jarrow, Tyne and Wear

Are the facts straight?

From Mr B. P. Threlfall, MRPharmS

I have obviously sold my pharmacies too soon if they could now be making the £180,000 net profit quoted in the letter and response from Bharat Nathwani (PJ, 7 July, p17). If my colleagues do not have a clue about NHS payments, what hope do we have that those outside pharmacy can be persuaded to pay more for additional services?

Yes £1,766m was allocated by the Department of Health but this was to pay for the provision of pharmacy services. A pharmacy receiving the average £180,000 will be paying a sum in the order of £20,000 for rent and rates, will need to employ two pharmacists full-time for about £85,000 (for the year) and at least four other staff for £45,000.

There will also be utility and computer bills, etc, of about £10,000 together with bank charges of about £7,000. That leaves about £13,000 as the net profit for the owner of the pharmacy — or under 2 per cent of turnover.

As an ex-independent contractor, I have never been particularly fond of multiples but on this occasion even I have to admit they are not as black as they are being painted by Mr Nathwani. Please get the facts a little straighter.

B. P. Threlfall
Lancaster, Lancashire

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