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Control of entry: what the changes mean for you

Business The sector may have welcomed the long-awaited changes to control of entry in England, but can we be so sure that the outcomes will be positive?

The sector may have welcomed the long-awaited changes to control of entry in England, but can we be so sure that the outcomes will be positive? James Waldron presents some best and worst case scenarios

You could almost hear the sighs of relief across the sector as the government finally announced its changes to control of entry last week. Although its proposals were first revealed last year, it took nearly nine months for pharmacy minister Earl Howe to confirm the date they would become law.

And the announcement could not have come a moment too soon – in recent weeks the control of entry rules had come under increasing pressure, with the 100-hour exemption facing particularly heavy criticism. It was little wonder, as government figures revealed the number of 100-hour pharmacies in England had shot up by more than 50 per cent in the space of two years to a total of 689 in 2010-11 – without a corresponding uplift in the global sum.

So there was a general feeling of optimism when the government confirmed the exemption would be scrapped, along with the exemptions for pharmacies in large out-of-town shopping centres and one-stop primary care centres.

More on control of entry PCTs gain powers to crack down on failing pharmacies

Number of pharmacies to rise despite end of 100-hour threat

'Overwhelming majority' backed removal of 100-hour exemption

But the new system will bring challenges of its own. Pharmaceutical needs assessments (PNAs) will now form the basis for decisions on new applications, and PCTs will have new powers to delist under-performing pharmacies. So, as the countdown begins to the changeover on September 1, we take a look at how these new regulations may affect the market.

Removing entry exemptions

● What's happening? The government will be scrapping the exemption that gives automatic market entry to pharmacies that open for 100 hours a week and for pharmacies that are situated in large out-of-town shopping centres or one-stop primary care centres.

● What did pharmacy say? The "overwhelming majority" of respondents to the government's consultation backed the removal of the 100-hour exemption, although this faced opposition from leading supermarket chains, with Sainsbury's labelling it "a retrograde step". But many 100-hour openings could still go through, as any application with a consultation period that ends before September 1 will still be valid.

● Government verdict: While it could "never fully satisfy all contractors", the Department of Health (DH) said the exemptions did not have a place "in a regulatory system based on pharmaceutical needs".

● Best case scenario: Noel Wardle, a partner at law firm Charles Russell, says the changes could bring more protection to existing pharmacy businesses. "There did seem to be a general feeling that the 100-hour exemption was destabilising the market and there was a risk of misuse," he says.

● Worst case scenario: It becomes harder for new pharmacists to enter the market. "I know a lot of young pharmacists who have used [the 100-hour exemption] as way to gain entry into the market where they might not otherwise have been able to," says Mr Wardle.

PNA market entry test

● What's happening? PCTs will use PNAs to decide whether a new pharmacy can open in their areas. Applicants will need to demonstrate their pharmacies could meet a current or future need identified in the PNA, or prove they will bring "unforeseen benefits" to local services.

● What did pharmacy say? The majority of respondents felt that the regulations were clear and supported the principle of opening pharmacies according to local needs. But there were concerns over the quality of PNAs, with worries they would fail to correctly identify needs. Respondents to the consultation were also split over the concept of "unforeseen benefits". While some said this would support service innovation, others were concerned this could prompt unnecessary new openings in PCTs with less robust PNAs.

● Government verdict: The government maintained the new system would better enable PCTs to plan local pharmaceutical services. It stressed that PCTs were legally required to produce PNAs of a certain quality, which should correctly assess local needs and not block necessary applications. "It would not be in the spirit of open competition for PCTs to limit the pool of potential applicants," the DH said.

● Best case scenario: "If it works as it's designed to, then it allows PCTs much more flexibility to assess demand and grant contracts to meet that demand," says Mr Wardle.

● Worst case scenario: "With PCTs scheduled to be dissolved next year, they have "little incentive to work proactively", the lawyer says. He also warns that many existing PNAs "don't properly identify local issues and local needs".

Relocation changes

● What's happening? The concepts of "minor and major relocations" and the need to designate specific "neighbourhoods" will be removed from the market entry test. Relocations will be exempted from the entry system if they result in "no significant change" to the provision of pharmaceutical services in the area.

● What did pharmacy say? More than 60 per cent of respondents argued that the amendment did not offer any clear advantage over existing arrangements. Many called for a better definition of the term "no significant change", which they feared could pave the way for legal disputes.

● Government verdict: The DH acknowledged the "understandable concern" over the new relocation test and admitted it may lead to more decisions being challenged. But it defended the test as a way of giving more consideration to the population using the pharmacy, rather than judging relocations on distance alone.

● Best case scenario: Removing the "highly subjective" neighbourhood concept could be "a positive step" towards making rulings on relocations simpler, says Mr Wardle.

● Worst case scenario: The vague term "no significant change" may be just as confusing. "It's difficult for an applicant to have any certainty over [their position], because it's subjective from the PCT's point of view," the lawyer says.

Performance sanctions

● What's happening? PCTs will have new powers to sanction under-performing pharmacies. The sanctions will include breach notices, withholding payments and, as a last resort, removal from the pharmaceutical list.

● What did pharmacy say? Most respondents felt the sanctions were reasonable, although contractors were keen for PCTs and LPCs to work together to ensure the powers were used proportionately. Some pharmacies also suggested a tariff for penalties to prevent PCTs taking inappropriate action.

● Government verdict: The DH stressed the importance of PCTs acting responsibly and taking proportionate, but not excessive, action. It argued against a tariff as it could prevent each case being "judged on its own merits".

● Best case scenario: The new powers should give PCTs "more flexibility" and enable more of a dialogue between PCTs and contractors, says Mr Wardle. "It was previously quite difficult to remove a contractor from the list, or force them to conform with the terms of service," he says.

● Worst case scenario: "You run the risk of inequalities in how different PCTs respond," says the lawyer. Responding to notices from the PCT may also lead to "an increased workload" for contractors, he warns.

Tighter distance selling controls

● What's happening? Distance-selling pharmacies are still exempt from the market entry test, but they will face tighter controls. Businesses will now have to provide uninterrupted service during opening hours without face-to-face contact. And they will have six months to ensure they meet they new criteria.

● What did pharmacy say? Almost 80 per cent of respondents opposed the continued exemption of distance-selling pharmacies. Respondents voiced concerns that many of these businesses targeted their local areas, instead of providing services nationwide. They also highlighted a growth in the number of GPs who had a financial interest in distance-selling pharmacies.

● Government verdict: While it noted the concerns, the DH said it could not "realistically" remove the distance-selling exemption – arguing that applications would "rarely, if ever, succeed" if judged by local PNAs. It also stressed that only 1.1 per cent of pharmacies in England were mail-order or internet only, and said it did not expect the number to "increase exponentially".

● Best case scenario: The tightening of the definition of distance-selling will close a "loophole" that allows these businesses to focus on offering services to patients in their areas, says Mr Wardle.

● Worst case scenario: Keeping distance-selling businesses exempt from the market entry test will still undermine the authority of PCTs. "We are supposed to have a market entry system that puts PCTs in control, but actually you still have an exemption which is outside of that scope," the lawyer says.

How will the control of entry changes affect your business?

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