By Hemant Patel
“The rights of every man are diminished when the rights of one man are threatened,” John F Kennedy once famously said – a rather apt statement to sum up the current state of community pharmacy in England.
The Department of Health and Social Care forced onto the community pharmacy sector a ‘sick puppy’ called Community Pharmacy Contractual Framework (CPCF) which our negotiator, PSNC, was ‘induced’ to accept. When the deal was announced, some people, including me, predicted with a high degree of confidence that ‘the puppy will get sicker,’ which is proving to be the case by the day.
Pharmacy contractors expect equity, fairness and justice when it comes to distribution of income and other resources. And these expectations are not one-sided: contractors are, in return, offering risky, upfront investment, organised effort, skills and knowledge, and relationships which drive the communities forward – all of which recently came to the fore when GP surgeries, without prior notice, pulled their shutters down – leaving community pharmacies as the only open-access care providers in our communities.
No one can question the productivity and high-quality of response from these often depleted and universally demoralised teams – the unsung heroes of the ongoing pandemic.
How GPs spun pharmacy into the middle of a tornado
The Department of Health and PSNC have been informed of an injustice that has been in existence for a long while but it was amplified when the doctors started to increase the period of treatment (POT) to 84 and 112 days when the panic of the Covid-19 virus set in, around early March.
When so many surgeries across the country suddenly started behaving in the same way, one has to ask: Who initiated the message to change the POT? And, why?
Pharmacists are justified to conclude that that it was essentially an organised effort to reduce workload in surgeries with no thought whatsoever of the consequences suffered by the patients and carers, supply chain and the pharmacies.
The impact at the community pharmacy level has been quite challenging on a number of fronts, and simply devastating for many contractors who need urgent support. This problem became more acute in mid-March across the country.
In my capacity as Secretary of North East London local pharmaceutical committee, I alerted PSNC and other LPCs on March 16. The change in POT was not a random act by a surgery or two or in an area or two; it appeared to be a universal problem. Significantly, it also coincided with the GPs ‘pulling the shutters’ and introducing dramatic and rapid changes in access to surgeries.
A committee member asked, ‘Howcome all surgeries adopt a new practice at the same time across the country?’
The POT changes led to a chain of events in the supply chain, starting with increase in drug shortages which in turn led to unprecedented price increases.
The resultant cascade effect in community pharmacy has been staggering – decrease in remuneration, increase in shortages of medicines, increase in time spent sourcing products, increase in frustration in pharmacies as public got angrier due to shortages and having to que for ages, increase in stock costs due to three or more months’ worth of stock being purchased at one time, increase in wholesalers putting a stop on the account mid-month as they were exceeding the credit limit, increase in bank overdrafts and loans, increase in despair as pharmacists had to deal with multiple problems suddenly and at lightening speed. The list is endless.
These two acts, outside of community control, spun pharmacy into the middle of a tornado that is still whirring. At North East London LPC we calculated what impact the POT changes would have on community pharmacy.
Key observations
1) Firstly, it is worth noting that CPCF funding consists of two different types of funding: ‘re-imbursement’ of the negotiated drug prices set in Drug Tarif and the remuneration for dispensing and other services.
Secondly, the scheduled delay in payment and drug cost increases are not factored into these calculations. Drug cost increases often lead to dispensing at a loss.
Thirdly, the CPCF is an averaging contract which means that at any given point there are losers and winners. We believe that there are some pharmacies that are constantly winning, while others are always losing.
2) Re-imbursement: Whilst at the end of the year the total annual drug costs remain the same (assuming no inflation occurs), there are still four peaks at quarterly intervals in investment pharmacy has to make to pay for preventable increase in volume which would cause worrying fluctuations in cashflow and require different types of considerations.
3) Remuneration: The impact on the dispensing fee is dramatic and devastating. Just taking a single item prescription, the annual remuneration drops from £14.40 for 12 dispensings to £4.80 for four dispensings.
This would result in an annual loss of remuneration of £9.60 per item (-66.7%). The return on cost of goods drops from 17.1% to 5.7%. The return on sales drops from 14.6% to 5.4%. At lower margins, a question arises as to why this situation is tolerable.
4) When the quarterly peaks occur, they could easily swallow the entire monthly gross remuneration payment of £9,000 and leave some more to find. An increase of POT from 28 to 84 days would require an additional £10,500 to pay for the drugs. So, the pharmacy still has to find an additional £1,500 to pay for the drugs and yet the pharmacy has overheads to pay that month.
5) Purchase profit is agreed to be £800m and that is shared by 11,500 pharmacies. This means each pharmacy gets £5,797.10 per month. This may or may not be enough that month.
6) Staff planning: There would be a need to re-plan the way staff are working to manage a varying workload.
7) Many quarterly payments for overheads (e.g. rent) by accident sync perfectly with the peak requirements for finance which started in March/April. Quarter days, the days that begin each quarter of the year. In England they are March 25 (Lady Day), June 24 (Midsummer Day), September 29 (Michaelmas Day), and December 25 (Christmas Day).
8) Whilst the CPCF Global Sum may not notice the effects of POT changes for a long time, the impact on individual pharmacy is immediate and pharmacies are highly exposed to this risk.
9) GPs are in effect controlling pharmacy expenditure and income and therefore the profitability and viability of the pharmacy. All pharmacies are highly exposed to this risk.
10) The unintended consequences POT changes need addressing as they introduce unfairness and injustice within the system, moves CPCF to become even more iniquitous, and the consequences include unplanned closures where the pharmacies are making a useful contribution.
The CPCF review promised for September should not determine the impact of the avoidable POT changes. The action is needed now to halt further detrimental changes.
Having performed miracles during the Covid 19 pandemic, having managed the overflow of patients from GP surgeries, having managed to work with volunteers to help the local public, and having somehow managed to overcome financial difficulties and stay afloat, the community pharmacy network does deserve help and support to even out its issues around workflow and finances which will be ultimately in public interest as well as in the interest of the NHS too.
