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Discount blues


Discount blues

Contractors in Northern Ireland are bracing themselves for the introduction of a discount scheme across generics, brands and appliances. But they are not convinced it will distribute money more fairly across the network, says Terry Maguire


February was a sad month. Contractors have been depressed but still found sufficient energy to be furious. Early in the month, we gathered in Antrim to discuss the state of our finances and agree tactics.

January payments reflected a 10 per cent to 15 per cent cut on previous months and understandably there was concern. These cuts date back to October and focused on apixaban from which we, apparently, did too well and must now repay.

In November and December following intervention from CPNI, Peter May, the permanent secretary (PS) at the DoH, stopped the monthly discount. Where this was welcome, it seemed a strange intervention because, if the PS was persuaded of our perilous financial position, why re-introduce it in January? There is either a problem or not.

On top of this, contractors are bracing themselves for the introduction of a new discount scheme that works across three groups; generics, brands and appliances, each with different discount rates.

The SPPG insist this new scheme will not remove money, merely distribute it more fairly across the network. In this cold wet month, contractors are still to be convinced. Many asked the SPPG to calculate the scheme’s impact on their businesses using figures for the past 12 months, the SPPG refused adding further to the concern.

And all this at a time DoH claims commitment to driving community pharmacy forward. It almost seems that there is a gaping disconnect between DoH policy direction and the strategic direction of the SPPG. The DoH insists it is investing in the network yet the SPPG seems fixated on draining more and more margin out.

Contractors are of the view that DoH’s new service investments are irrelevant if SPPG removes margin necessary to sustain capacity to engage with these services. What is clear is that the £26.5 million retained profit was always insufficient and a higher figure was achieved year on year allowing the network to function but this is now eroded; by the SPPG doing its job (£12 million more cuts in coming months) and, more significantly, highly unfavourable market conditions.

These factors are threatening the viability of some businesses but for all businesses values have shrunk to fire-sale prices.

In this environment, UK multiples have closed pharmacies. Local multiples are considering options, for example repurposing pharmacies taking advantage of the lease values which is more than they get for running a pharmacy business as a going concern.

For the 30 per cent of independents due to retire in the next five years and whose businesses are their pension pots, they see few good choices. I do not subscribe to the theory that SPPG’s strategy is to shrink the network by starving it of core funding. SPPG is all too aware of the consequences.

The unprecedented closure of a group of four pharmacies at the start of February as the group struggled to appoint a superintendent, identifies the real challenges of unplanned pharmacy closures.

There were significant problems supporting patients left uncertain how they might get their medicines. Pharmacies close to the shut businesses were expected to take up the slack but that is difficult and potentially unsafe when the number of prescriptions dispensed exceeds safe operating capacity.

There were the issues of; uncollected medicines, owed medicines, house bound patient deliveries and off course MDSs trays. Switching MDS patients is not simple by any means and there should be no requirement on the new pharmacy to accept the MDS patients.

These closures are a huge inconvenience for the local population and adds considerable risk to patient care. Whatever the failings of the business owner the regulator needs to look carefully at how this situation was allowed to happen and ensure it is avoided in future.

The SPPG is, I suspect, looking at this crisis and wondering how it would manage if 10 per cent of the network is forced to close. But the SPPG hear us crying wolf too often and might be immune to our pleas even when the wolf is at the door.

So, what are contractors to do? We agreed in Antrim to write letters to DoH and SPPG telling them of our individual difficulties. We are cancelling our standing order or directed debit mandates with wholesalers and telling them we will pay what we can when we can. It’s hardly the stuff of militant trade unionism.  

The Sun will return. Our new Assembly, following a meeting with the minister, injected £10.1 million and most of this was paid at the end of February. Not enough, say CPNI, and they are right.

But we will go back to accepting that, within the current pharmacy contract which we have no appetite to change, this is the way things are.


Terry Maguire is a leading pharmacist in Northern Ireland.


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