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Pharmacy clusters – what they are and why DH wants them gone

The government has used the term several times since it announced cuts to pharmacy funding – but what is a pharmacy 'cluster' and why is it so keen to remove them?

The Department of Health (DH) first used the term "clustering" to describe areas where there are several pharmacies in its open letter announcing a 6% cut to pharmacy funding at the end of last year.

Since then, it has used the term in its justification for scrapping establishment payments and plans to make it easier for two pharmacies to merge.

So what are clusters, and what does the DH intend to do about them?

What's the definition?

The DH defines “clustering” as a situation where three or more pharmacies lie within 10 minutes’ walk of one another. It claims that 40% of English pharmacies are currently situated in a cluster.

Why doesn’t the DH like them?

The DH believes that the current system of establishment payments – which it intends to abolish – encourages pharmacies dispensing “relatively low” volumes of prescriptions to cluster along high streets or around GP surgeries, it said in source papers released ahead of a pharmacy stakeholder event last month.

Rather than "efficient pharmacies with large prescription volumes”, contractors are tempted to maximise their funding by owning several low-volume pharmacies in a cluster, which are each paid an established payment, the DH claims.

What does it plan to do about them?

As well as amending the law to allow pharmacies in a cluster to merge, the abolishment of establishment payments will also reduce the incentive to operate pharmacies in a cluster, the DH believes.

What does the sector think?

An interim summary of responses to the government’s consultation on the funding cuts revealed that not everyone agrees with the DH’s assumptions about clusters.

According to the DH, some respondents said clusters are not necessarily inefficient, and may be the result of high prescription volumes in some areas or the “commercial viability of certain locations”.

Last week, Pharmacy London chief executive Rekah Shah stressed that clusters are needed in London because of the "tailored" services they offer to meet the "diverse cultural and language needs" in the capital.


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