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Legal view: What now for Lloydspharmacy services in Sainsbury's?

What are Lloydspharmacy's options following its decision to withdraw pharmacy services from 237 Sainsbury's stores? Noel Wardle explains

C+D recently reported that Lloydspharmacy is planning to withdraw services from all Sainsbury's branches over the coming year. In terms of what might happen to those branches, the multiple will have several options.

For its part, Lloydspharmacy has told C+D it is "currently exploring options for each individual branch"

The most obvious option would simply be to sell the pharmacies to another business that could carry on running them within the Sainsbury's store, submitting a change of ownership application to the NHS to transfer the pharmacy to the purchaser.

This would, of course, require the purchaser to reach an agreement with Sainsbury's to continue to occupy the onsite unit. If it is not possible for the pharmacies to carry on being operated by another provider onsite, Lloydspharmacy could consider simply closing the pharmacies down.

Read more: Lloydspharmacy to ‘withdraw’ pharmacy services from all Sainsbury’s branches

This would require it to give notice to NHS England (NHSE) of its intention to cease the provision of pharmaceutical services.

Where a pharmacy is on a standard 40-hour contract, Lloydspharmacy would have to give NHSE three months’ notice to close. Where a pharmacy is on a 100-hour contract, the notice period increases to six months.

Whichever notice period is required, NHSE can accept a shorter notice period “for good cause”, but consent for a shorter period is rarely given.

Were a pharmacy owner to close a branch without giving the appropriate notice, that may be considered a breach of the terms of service by NHSE. This could result in the commissioning body issuing a breach notice to the pharmacy owner.

Read more: Lloydspharmacy quits Sainsbury’s: What we do (and don't) know so far

Where notice to close is given, once the requisite period has expired, the pharmacy will be permanently removed from the pharmaceutical list, meaning that NHS pharmaceutical services can no longer be provided.

Closing a branch outright may give rise to a risk that a pharmacist could apply to NHSE for a new pharmacy contract based on the closure creating a gap in service provision, particularly if there are no other pharmacies nearby.

In order to preserve the pharmacy contract, there are several options Lloydspharmacy could consider – if we are working on the assumption it would not be in a position to sell the pharmacy to another in order for them to run it onsite in the Sainsbury's store.

 

Relocation: Key considerations

 

The most obvious option may be to apply to NHSE to relocate a pharmacy to nearby suitable – and identifiable – premises.

Among other things, this would require the owner to demonstrate to NHSE that the relocation would not result in pharmaceutical services being significantly less accessible for any of the pharmacy’s patient groups.

The rules do not stipulate any maximum distance over which a relocation may take place.

Read more: Lloydspharmacy exits Sainsbury’s: Locations of all the branches revealed

However, as the regulatory test is primarily a question of accessibility, issues such as the distance to the proposed premises and any other potential barriers to access – whether physical, social or mental – will be relevant factors for NHSE to consider.

A relocation application may also be combined with a change of ownership application, enabling a person who has agreed to purchase to apply to NHSE to relocate the branch at the same time as transferring ownership of it to the purchaser.

This would have the benefit of allowing a purchaser to commence services at the new site rather than having to take ownership of the pharmacy within the Sainsbury's store before trying to relocate it.

 

Consolidation options

 

If there is another pharmacy relatively nearby, Lloydspharmacy might also consider whether to consolidate the Sainsbury’s branch into an existing pharmacy premises – whether it owns that branch or not.

There are benefits to a merger application, in that it ought to allow for the continuity of the provision of services by the remaining branch. It also allows for some protection over a new pharmacy application being made to fill any perceived gap caused by the closure.

In order to consolidate two pharmacies onto one site, an application would have to be made to NHSE.

In assessing the application, NHSE must consider whether granting the consolidation would result in any gap in service provision caused by the loss of service of the branch within the Sainsbury's store.

That gap may be caused by a physical lack of access, or the loss of service provision – such as a reduction in opening hours. For example where a 100-hour pharmacy is consolidating onto a 40-hour site, with the remaining pharmacy operating for only 40 hours a week.

Read more: 'A wake-up call': All the reaction to the Lloydspharmacy Sainsbury's exit

Assuming NHSE grants the consolidation and accepts that it would not result in any significant gap in service provision, the Health and Wellbeing Board may produce an addendum to its Pharmaceutical Needs Assessment (PNA) noting the consolidation but stating that it does not create a gap in service provision.

This should prevent any new application from being granted based on the consolidation for the lifetime of the relevant PNA.

Where a relocation or consolidation application is being considered, there is a set procedure for applying to NHSE, for the application to be notified to local contractors and for rights of appeal in certain circumstances.

This process can often take several months and Lloydspharmacy would have to keep the branches open and providing services until the application process concludes.

 

Noel Wardle is a partner at Temple Bright, specialising in pharmacy law

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