Market entry application involves a two-stage process

By Noel Wardle

As most NHS pharmacy contractors will know, there are complex rules which govern where pharmacies can open and how they can move around.

Noel Wardle, Charles Russell Speechlys

These rules are commonly referred to as “market entry” and differ between each of the Home Nations.

In England, market-entry rules were changed in 2012 to a system which is based on Pharmaceutical Needs Assessments (PNA), which are published at least every three years by local Health and Wellbeing Boards.

Essentially an application may be granted if it would secure improvements in, or better access to, pharmaceutical services which are identified in the relevant PNA. An application may also be granted if it would secure benefits which were unforeseen in the relevant PNA.

There is a two-stage process to the determination of a market entry application: the first stage is a determination by NHS England; the second stage is an appeal to Primary Care Appeals, which is a division of NHS Resolution.

Every year, NHS Resolution publishes an annual report summarising PCA’s activity in determining market entry appeals during the previous year. The most recent report has just been published, and makes interesting reading.

The headline number of market entry appeals determined by NHS Resolution in 2018/2019 has remained stable at 135, compared to 140 for the previous year.

Despite the fact that the market entry regulations were intended to put control over new pharmacy openings into the hands of local commissioners through PNAs, relatively few applications are made under the PNA-based test for a new pharmacy contract application. Of the 72 “bricks and mortar” new contract application appeals determined by NHS Resolution in 2018/2019, only 13 of those were applications offering to meet a need identified in the relevant PNA.

Perhaps more surprisingly, not a single PNA-based new contract application was granted on appeal last year. It might be that some PNA-based applications were granted by NHS England and did not go to appeal, although that seems unlikely. Perhaps more likely – and this may not surprise anyone who has read their local PNA – is that PNAs are just not identifying any unmet needs. In the absence of an identified need, a PNA-based application must be refused. Since the last round of PNAs were published only in April 2018, it seems unlikely that we will see an increase in PNA application grants before the next PNAs are published in April 2021.

Applications offering to meet an unforeseen benefit had a higher chance of success, with around nine per cent of applications granted. What made the difference for those which were granted? In the ones in which we were involved, they were applications for a new pharmacy in a large, new housing estate which also contained a range of other services (schools, shops, medical centre, etc.), where the nearest pharmacies were some distance away and were difficult to get to, and where there was significant local support.

In 2018/2019, NHS Resolution determined 24 distance selling pharmacy appeals, granting 17 of them. That was down from 57 appeals in 2015/2016 but is still a fair number given that these are supposed to be national contracts.

There were 17 appeals relating to relocation applications in 2018/2019. Of those, seven applications were granted and seven were refused (with the rest being either withdrawn or remitted back to NHS England), giving a roughly 50/50 chance of a relocation appeal succeeding.

The market entry provision relating to relocations is now complex, and requires applicants to set out the patient groups which are accustomed to accessing pharmaceutical services at the existing premises and then to explain why, for each of those patient groups, the proposed premises would not be significantly less accessible. It is therefore important to make sure that enough information is given regarding each of the pharmacy’s patient groups to enable NHS Resolution to consider the possible implications of a relocation for each group.

Whether proposed premises are significantly less accessible will depend on many factors, including any physical barriers (such as distance, inclines, busy roads) as well as mental or social barriers that might impact on the group’s ability to access the proposed site. Distance is not everything, though, and even moves over a relatively short distance can be refused. For example, NHS Resolution recently refused an application relating to a pharmacy which was trying to move away from a very busy town centre location into a GP surgery in a much quieter residential area even though the move was less than 500 metres away.

In early 2018 the Department of Health published a review of the market entry regulations in England and recommended that they should be kept. In the absence of any significant overhaul of the market entry rules, it looks likely that the picture at the end of 2019/2020 will not be significantly different to the past year. With so much uncertainty and change in the sector at the moment, most contractors will probably be pleased to hear that at least market entry is “steady as she goes”.

The above is a general overview and we recommend that independent legal advice is sought for your specific concerns. If you require further information in relation to the points raised in this article you should contact Noel Wardle who is a Partner and heads the Healthcare Regulation and Pharmacy Teams at Charles Russell Speechlys LLP. Noel can be contacted on [email protected]

This article also appears in the December/January issue of Pharmacy Business.

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