Supply chain bottlenecks impacting community pharmacy margins, MPs say

Instability in the supply chain network is frequently undermining the profit margins in community pharmacies, former Pharmacy Minister and Chair of the Health and Social Care Committee Steve Brine has said.

Brine emphasised that community pharmacies often lack information about the prices wholesalers charge for essential generic medications. "They lack visibility into scarcity, and the pricing of these products is often significantly higher compared to other European countries," the former minister remarked during a parliamentary debate focused on the future of community pharmacies on September 14.

From financial pressures to workforce crisis and pharmacy closures, the debate delved into critical challenges faced by pharmacies, aiming to propose tangible solutions for a sustainable future in the sector.

Chaired by Sir Mark Hendrik, the debate was initiated by Conservative MP Peter Aldous and featured contributions from a host of participants including Labour MPs Taiwo Owatemi and George Howarth among others.

Pressing matters

Aldous said that supply instability, in particular, poses a critical concern. “This not only stresses pharmacists' operations but also places financial strains on their businesses and leads to concerning delays for patients,” he said.

Owatemi, a practicing pharmacist herself and chair of the all-party parliamentary group (APPG) on pharmacy, underscored the substantial challenges facing the medicine supply chain. "Whenever I talk with pharmacy owners and pharmacists, they consistently point out the impact of uncertainty on their profit margins," she said.

"In our country, we face challenges in both the distribution and manufacturing of medicines," Owatemi added. “Middlemen in the supply chain can withhold medications, occasionally contributing to price inflation. Moreover, we encounter difficulties in producing generics, which constitute approximately 80 per cent of the medicines utilised by the NHS.”

Meanwhile, Brine further said the medicines supply chain is in need of serious love from ministers.

"I strongly urge the government to implement a robust system for planning future pandemics and addressing shortages of critical pharmaceuticals, as this undermines the sector and diminishes the impact of its commendable efforts,” he added.

Labour MP for Knowsley, George Howarth, also brought attention to the matter of medical supply chains. "The current allowable margin is £800 million, a figure established in 2014 and left unexamined since," he stated. "This effectively translates to an annual reduction in available margin."

“In reality, all pharmacies encounter shrinking resources for procuring medical supplies,” Howarth emphasised. “Independent pharmacies lack the leverage to negotiate lower purchasing rates due to their inability to buy in bulk, a capability reserved for larger national pharmacy chains."

Aldous further said independent pharmacies frequently dedicate long, unrewarded hours to serve their local communities while corporate chains rely on retail sales to support their pharmacy operations.

'Closures will escalate into deluge'

"Without urgent sectoral reform, the current trickle of closures will escalate into a deluge," he cautioned. "In the initial six months of this year, England witnessed a decrease of 222 pharmacies. Despite this ongoing decline, there are still around 10,800 community pharmacies in operation across England."

Aldous also stated that a 30 per cent real-term funding cut over the past seven years has compelled community pharmacies to ensure financial sustainability by reducing discretionary services. "This ultimately leads to closures — Lloyds has closed 461, and Boots announced 300 closures in June."

He further confirmed that Boots will be closing its Orwell Road shop in Felixstowe on November 18.

Next steps for pharmacy as five-year deal ends

Pharmacy Minister Neil O'Brien emphasised that it's crucial to consider access rather than just numbers acknowledging the fact that members raised the issue of the number of pharmacies closed in the recent past.

"We keep a close watch on pharmacy closures," O'Brien replied during the debate. "Our data indicates that, despite some pharmacy closures since 2017, there are approximately 10,800 pharmacies in operation today, surpassing the number in 2010."

He also emphasised that it's crucial to consider access rather than just numbers. "We're aware that 80 per cent of the population resides within a 20-minute walk from a pharmacy, and there are twice as many pharmacies in economically disadvantaged areas."

"The current five-year deal is nearing its end, and we must consider the next steps for pharmacy," O'Brien added. "As part of this, NHS England has committed to commissioning an economic study to better grasp the costs of delivering pharmaceutical services. This study will be instrumental in shaping future.”

To tackle supply chain bottlenecks, the pharmacy minister said the government is collaborating with medicine suppliers to pinpoint medications that could transition from prescription-only status (known as "POM") to being available directly in a pharmacy (known as "P").

“This is a huge package of structural reforms and a huge liberalisation of the structure of pharmacy, enabling pharmacists with ever-growing clinical skills to do more and not be caught up in bureaucracy,” O'Brien added.

The minister also concurred with Owatemi's request for a meeting with the pharmacy APPG in the near future.

The government has allocated £200 million to strengthen NHS capacity and streamline patient care for the approaching winter season. This additional funding aims to support the healthcare system during its most demanding phase, while safeguarding elective care to further reduce waiting lists, Prime Minister Rishi Sunak said on August 14.