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More pharmacy closures predicted after 17p-per-item price drop

Contractor: Pharmacy hasn't hit its lowest point yet
Contractor: Pharmacy hasn't hit its lowest point yet

More pharmacies could close as a result of this month's 17p-per-item price drop, a contractor has told C+D.

Pharmacy owners in England are currently facing a 17p-per-item price drop across all category M items for July. It comes on top of the ongoing category M clawback – which already represents an average drop of around 17-18p-per-item – and is due to end on July 31.

Hasmukh Vyas – who owns three pharmacies in Northampton and Leicester – told C+D last week (July 11) that while funding cuts and the category M clawback have already hit pharmacy owners “severely”, they will not feel the “full impact” of the 17p-per-item price drop until September.

Government data revealed in May that 156 pharmacies in England have closed since the funding cuts came into force. Mr Vyas predicted that “the situation will get worse before we hit the lowest point” and “more pharmacies will close” as a result.

Reducing staff

Mr Vyas has reduced staff in order for his pharmacies to stay profitable, which has put additional pressure on his remaining employees, he told C+D.

“We are still operating at a level which provides a good and safe patient service,” he stressed.

“For the foreseeable future, we are making sensible cashflow forecasts to see us through the next phase of [funding cuts],” Mr Vyas said.

“A number” of contractors have expressed “serious concerns” about the future viability of their businesses, he added.

“Depressing” combination

Irfan Motala – director of Vision Pharmacy in West Midlands – told C+D the “depressing” combination of the current clawback and the 17p-per-item price drop has impacted cashflow “big time”.

He has been forced to cut staff hours and reduce free medicines deliveries to counter the effects, he explained.

“It’s [been] getting tighter and tighter over the past two years,” Motala added. “This new 17p-per-item [drop is] just the cherry on the cake.”

18 Comments
Question: 
How will the 17p-per-item price drop affect your pharmacy?

AJ Smith, Locum pharmacist

The demand for pharmacies to buy is at an all time high. We've yet to see the value of pharmacies plummet, despite the same stories about endless cut backs. We have net annual immigration of half a million people each year so the demand for medicines is going to increase. I agree with the government there is no need fixing r multiple pharmacies clustered around surgeries .thatwas because they allowed 100 hour pharmacies to open.

Jenny Smyth, Pharmacy Asistant/ Medicine Counter Assistant

Rowlands are cutting branches by closing or merging, dosette trays moving to a central hub.  Staff been left in the dark, just told HR will come in and give us notice. Told we would have someone to support us thru it but not seen our area manager since this decision? Area managers been cut from 27 to 9 staff? Rowlands got really ruthless. Worst company ever worked for

Alexander The Great, Community pharmacist

Unfortunately whenever large companies plan to close or make redundancies, those that are hit, are the last to know. Simply because it will affect morale and their business too much if you know in advance. Rowlands have kept it quiet!

Jonny Johal, Pharmacy Area manager/ Operations Manager

Spot on Jenny. I luckily have never worked for them, just a phone call with Kenny Black was enough for me to walk away. 

R A, Community pharmacist

Unfortunately, the business model of pharmacy was always on shaky grounds for a long time so this was inevitable. To put it simply profitability was directly related to the goodwill of the government i.e. maintaining control of entry and a generous reimbursement scheme.

From 2005 onwards the government has been hacking away reimbursement fee thus reducing the operating margin of the business. In addition, 100-hour pharmacies were also introduced. The contractors reacted by squeezing their staff. Regrettably, this option has been exhausted and contractors now face a slow decline in their own earnings. At the end of the day if you pay a pharmacist £13 per hour and the living minimum wage is £8.45 per hour I'm not sure how many sane pharmacists would accept an additional £4.55 per hour for all the risk it carries. Therefore the burden now lies with the contractors.

Kudos to the contractors who exited out of this business in 2007-2010 these guys sure must have profited enormously from the business during their career and they have probably achieved a premium on the goodwill for their pharmacies.  

Sue Per, Locum pharmacist

The DOH has still got a fair way to go yet. it needs to investigate and crackdown on 

1)Specialgate, 1500% profit on cost!! as reported in press recently.

2)MUR gate,

3)N8 - list,

4)RD batch scripts processed and claimed well before dispensing and issue to patients, in some cases a year in advance!!!

5)Over-ordering on patients behalf, and claiming for non dispensed and un-collected items.

The days of the fraudsters are numbered!!!

The innovative contractors are immortal - they will not close, but innovate new ways of manipulating the NHS contract, especilly the vertically inclined groups.

An opinion from H Modi, painting a grim future for the pharmacy contractors, sponsored by C&D will follow, shortly. 

 

 

 

 

 

R A, Community pharmacist

I'm not talking about closing loopholes. I am referring to generous reimbursement fees being reduced because the pharmacy sector has little pricing power.

Its amusing in the past how so many articles were published of "entrepreneurial" pharmacists building mini-chains and many making trump-esque claims of their business skills when in reality it was only possible due to the control of entry and decent reimbursement fees.

I wonder now why so many of these entrepreneurial pharmacists cant swim in the ocean of business when the tide is down? When in the past they made great claims of their business skills? Although it's clear now community pharmacy business only existed at the grace of the British Government!

Watto 59, Pharmacy owner/ Proprietor

All very well if you are comparing Lidl to Tescos.  However I would suggest that providing NHS pharmaceutical service is not a purely commercial enterprise. 

We have a strict set of ethical and professional standards to adhere to with regulation and inspection by several official bodies with multiple powers of reprimand.

Moreover we cannot gain advantage by the use of many commercial strategies which a conventional business can employ  For example we cannot offer a discount on the NHS prescription charge or give out free products with every prescription dispensed.  In short we cannot and/or should not compete on a commercial basis by offering an invideous distinction in respect of  NHS services, though it is my contention that offering free delivery, collection and ordering of NHS prescriptions is doing exactly that . 

At leat partially in return for commercial restictions due to professional standards it is implicit that this is  recognised by the DoH/Government in negotiations with the PSNC when determining contractual issues.  The DoH have seemingly completly abandoned this  understanding and furthemore the PSNC have been ineffectual in reminding them of it.  It is surely the case that a pharmaceutical service of some kind must be provided by the NHS i.e someone has to do it.  Contractors have invested significant time and money to provide this sevice not with the thought that the NHS owes them a living but with a knowledge of the historical working of the contract and a not unreasonable expectation for that general direction to continue. Such a drastic and arbitrary abandoning of this without  notice is a complete betrayal of any fair or  independent recognition of a contrator's previous present and future contribution.  If the DoH wants a complete change in NHS pharmacy contracts then it should provide a managed and fair exit strategy for those unable to comply with their new vision.   Imagine the consternation that would be casued and the subsequent protests  if  GPs with their much stronger representation  had to suffer a similar imposition on their contract.     

R A, Community pharmacist

The problem is this these days pharmacies are no longer required to do extemporaneous dispensing. Therefore they have lost their USP factor. The fat margins they used to earn from the retail side of the pharmacy i.e. OTC medication, toiletries and fragrance has all been eroded by supermarkets and discount stores. Therefore at least in UK the only commercial option available to the community pharmacy sector is to offer private health services such as allergy tests etc.

Unfortunately, in the UK public expect health service for free. Patients fail to get necessary dental treatment because it will cost money but they happily pay to go on holidays.  

With this mentality, the UK pharmacy model is tied to the government's goodwill, which is eroding. All I am saying is that its a rotten business model and past success has been due to being in the right place right time. Nothing to do with ability as pharmacists used to claim. In Europe despite the issues related to the pharmacy business model, due to solidarity between pharmacy professionals they have managed to restrict the sales of medication outside of a pharmacy premise and by limiting ownership avoided the dilemma UK Pharmacists and UK community pharmacy face themselves now. 

Part of the blame lies with pharmacists themselves. If RPSGB/NPA/PSNC/LPC mandated that individual pharmacists could not own more than 6-7 pharmacies per chain the market would have remained too fragmented for the government to reduce funding. Unfortunately, many pharmacists assumed the merry go round would continue forever so expanded with debt as they still do. This has consolidated the market and what the government is doing is hacking away all the extra profit the vertical integration system would have otherwise brought in. 

Its sad in the UK how a good profession and trade has been brought to its knees, whilst in continental Europe due to its focus on independent pharmacy the profession remains strong and will continue to do so in the near future. I say this because my original incentive to study pharmacy was to eventually own my own pharmacy. Given the poor returns, it offers this has deterred me from wishing to own a pharmacy. Also, the goodwill price being overinflated due to the presence of multiples. 

This will also deter future bright students from studying pharmacy. Inevitably it will lead to a decline in the quality in the service of pharmacy in the UK.  As people only follow a course of action if there are long-term benefits. Given the set up in community pharmacy all a pharmacy student could hope to get is a salary under £30k, working 9 hours per day under horrendous working condition for 5 days a week and a huge student loan to pay off for the rest of your life. Bon appetite. 

Watto 59, Pharmacy owner/ Proprietor

1 The cost of specials is entirely of the DoH/NHS own making.  The vast majority of specials could be made in any pharmacy but due to over regulation "secundum artem" is no longer a pharmacy USP.  If the DoH want to regulate the price further thats OK by me, and furthermore the prescribers should be aware of the cost so it is up to them whether they think it necessary... not the pharmacy.  My pharmacy only does one or two specials a year so I could just about buy a wheelnut for my Rolls Royce with the profit.

2 MURs is what we used to do on an ongoing basis every week of the year until the DoH tookaway part of our funding to pay some of it back by introducing the MUR.  I would be quite happy to scrap them provided the funding was returned to the global sum.  I could then advise a customer or their doctor to consider an alteration to their medication as and when the need arose rather than the somewhat false and forced situation imposed upon me.

3 NP8 list is virtually obsolete is it not? Also if there are still some outstanding items which are arguably overpriced for whatever reason these are far outweighed by the vast number of concession and catagory M products having to be dispensed at a loss. Not to mention the ridiculous ongoing (since time immemorial) charitable donation pharmacies make to the NHS whenever a part original pack of a surgical line is made without being able to claim broken bulk.

4 I can only speak for myself but if I get a 6 month RD prescription I do not see another one until approx 6 months later, which  are dispensed as and when required more or less over the prescribed period.  I cannot see any significant potential for large scale  abuse with RD prescriptions  as it should become very quickly apparent to the prescriber if it was ocurring.

5 Over ordering.  Easy solution is we should not be ordering them at all as we are not paid to do so.  It is only the likes of Boots and Lloyds that have started us down this path leaving little choice other than to do the same.  I have several surgeries now who insist that patients can only order their repeats through a pharmacy.  We act like unpaid Doctor's Receptionists constantly answering phone requests to order items in addition to managing monthly managed repeats once again unpaid. I would love the DoH to put a stop to all this right accross the pharmacy sector as this as it is a proper pain. Uncollected items must surely be  insignificant  for  most pharmacies  but in any case if an item has been paid for, ordered and  processed in good faith, is it so unreasonable to expect be paid for it ?

A Hussain, Senior Management

Well said

 

S Morein, Pharmacy Area manager/ Operations Manager

More of the same from contractors who have been constant in their refrain of iminent demise of pharmacy contractors since CatM was introduced 13 years ago. But in reality contractor numbers are significantly higher than in 2005 as are net profit percentages, turnover and goodwill values. It fools no one, least of all the DH, these fake cries of poverty. Maybe next year these cash strapped contractors can continue their whinge at an annual conference in some exotic resort like they have consistentlyfor many years.

A Hussain, Senior Management

Get back under the bridge.

Jonny Johal, Pharmacy Area manager/ Operations Manager

S Morein, contractors have been moaning and whinging consistently for as long as I can remember on everything e.g. wholesale price maintenance, retail price maintenance, oncost, leapfrogging, clawbacks, Cat M etc etc ... I wish to point out that participation in the NHS is voluntary.

Dave Downham, Manager

Wondered when you were going to crawl out from your rock. Must be the hot weather. Your "reality" is as convincing as Donald Trump's smile for those who are looking at their cashflow forecasts with no idea of when the contract will be sorted.

S Morein, Pharmacy Area manager/ Operations Manager

Mr Downham cashflow forcasts as I am sure you know are entirely different to profit. The old "turnover is vanity, profit is sanity" adgage applies. I do however believe that you are wasted in Pharmacy your key skills obviously lay elsewhere. For years you have written the most detailed fiction about the "demise" of pharmacy. Give up dispensing and become a fiction writer you are a natural.

Dave Downham, Manager

Oh, Ms Morein!

You may well be surprised to learn that I am not in fact a dispenser/pharmacy so know full well that the full <sic> adgage is "Turnover is vanity, profit is sanity...but cash is king". As I am sure you know, reduced profit will ultimately result is reduced cashflow as I am sure you know. If cash flow is hit - as this reduction will, as I am sure you know - then businesses will suffer, as I am sure you know.

When my book is published, the Sarah Sanders character may share your avatar.

N patel , Non Pharmacist Branch Manager

Maybe morein IS
Fake ia a word bot use a lot
Nice to know mr President is interested in pharmacy matters

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