A judicial review of a contract relocation case could make it easier for multiples to take over some, particularly 100-hour, contracts. Chief executive of Mr Pickford’s Pharmacy Mukesh Lad explains the implications for independents

In the autumn of last year, I wrote about one of the largest national supermarket chains submitting a pharmacy relocation application under the ‘Ownership with No Significant Change’ ruling. The actual
relocation referred to a small 100-hour pharmacy contractor site and the new giant superstore location was several miles away. The supermarket chain followed due process for relocation but its application was justly refused by NHS England last February.

Not unsurprisingly, an appeal to the NHS Litigation Authority followed in the summer, with the NHS area team decision being overturned, which then led to an oral appeal hearing. The Litigation Authority upheld the original decision to reject the ‘no significant change application’.

There was no shortage of David and Goliath analogies to describe our success at the time. And in that vein, we, the underdog independents, are suddenly now faced with falling on our sword.

And now a judicial review

Despite the new era in market entry regulations that came into effect in April 2013 for new, additional or relocated premises applications, the supermarket in question remained dissatisfied with the decision against it. Now we’re told the case is being taken forward for judicial review. In other words, it’s a challenge to the way in which the original decision was made, whether procedures were correctly followed and whether it was lawful, regardless of the conclusion reached.

The implications of this review and its outcomes are of huge importance to independent pharmacies. The use of qualitative and quantitative data in relation to patient access to pharmacy services will be a major part of the review. The key point here is to what extent the pharmacy relocation affects the local community’s access to pharmacy services. If, as the challenge is suggesting, the majority of the service is delivered to patients’ homes with very few actually using the premises, this could potentially challenge any accessibility decisions.

Opening the floodgates

Should the judge uphold the challenge during his review of the case, the likelihood of a loosening of the interpretation of the accessibility rule is highly likely. And any such relaxing of regulations would have a major, potentially catastrophic, effect on independent pharmacies. In practical terms, it would open the floodgates to large pharmacy chains taking on smaller independent contracts, especially where some of our independent 100-hour pharmacies are struggling.

Any such relaxing of regulations would have a major, potentially catastrophic, effect on independent pharmacies

An imminent threat

Whilst this matter has yet to reach judicial review, permission has been granted and we expect an outcome in the spring. The threat is nevertheless upon us and it’s important that independent pharmacy contractors understand the implications of this action, and even more so if the challenge is successful. Supermarket giants request judicial reviews on an almost monthly basis across all aspects of their operations. They have the legal teams and financial resources on hand to do this.

For a lone independent pharmacy, however, the cost and complexity of a legal challenge is all but prohibitive. In light of the pending review that really could affect the business success of us all in the future, I strongly urge independent contractors to start talking to each other and possibly consider forming federated pharmacy groups, in order to create a ‘fighting fund’ of pooled financial and human resources to cover the costs of rebuttal of any similar challenge in your area.

For tips on creating a federated group, and the full story on how I set up the LIPCO pharmacy federation in Leicestershire, see the article on the facing page.

Reasons to federate

The process and procedures to be followed are similar for each independent. Therefore, it makes financial sense to be prepared to engage one specialist law firm to do the work once for a number of pharmacies, as opposed to a number of law firms doing similar work for each individual pharmacy.

Every day I come across more and more reasons for independent pharmacies to unite and collaborate for the greater good. Whether it is to bid for commissioned services, share best practice and opportunities, benefit from economies of scale or, as in this case, stand strong together against yet another potential threat to our livelihood.

Time to think differently

We need to think differently about obstacles and disadvantages and how to overcome them. If we reshape the way we operate and work together, we can build individual and collective confidence that will benefit us all.

I started this month with an analogy so, for a change, I’ll close with a definition. Economies of scale provide a cost advantage that arises with increased output of a product.

In this case, a united pharmacy group can achieve much more legal muscle-power for a fixed cost. In other words, the greater the quantity of a good produced, the lower the per-unit fixed cost because these costs are shared over a larger number of goods.

You know it makes sense!