In an analysis published alongside its 2016 announcement of the 12% cut to pharmacy funding in England, the Department of Health and Social Care (DH) referred to data which it claimed showed pharmacies “run at a 15% operating margin”.

Lord Justice Gary Hickinbottom – one of three judges presiding over pharmacy's appeal against the funding cuts this week – asked the DH’s lawyer James Eadie QC what the purpose of referring to this “very weak” data was.

Alison Foster QC – the lawyer representing the Pharmaceutical Services Negotiating Committee (PSNC) at the appeal – claimed the 15% figure had been “referred to in numerous submissions” by the DH to justify the funding cut.

The DH’s reliance on such material was “unlawful” as it was “fundamentally flawed and misleading”, she claimed in documents outlining her argument.

DH: 15% figure “in no way fundamental”

Mr Eadie claimed the 15% figure was “in no way fundamental to the whole edifice” of the DH’s decision to implement the funding cuts.

But Judge Sir Jack Beatson asked: “Why should we say it's not central [to the decision]?”

Lord Justice Stephen Irwin added: “It may not be surprising if the [pharmacy] minister [David Mowat, at the time] read this and nothing else before he made his speech” announcing the funding cuts.

15% figure “cannot be marginalised”

Addressing Mr Eadie in the Royal Courts of Justice yesterday, Ms Foster said: “You did rely on [the data], it was important, it cannot be marginalised.”

Documents used by the DH in the “early stages of discussion” about the funding cuts referred to a profit margin of pharmacies of 7%, she added.

Mr Eadie argued that the DH took into account a range of factors – which amounted to a “fat document” – before implementing the funding cuts.

Basis of the appeal

When granting PSNC permission to appeal his decision to uphold the funding cuts in June 2017, Judge Justice Collins said: "While naturally I am not persuaded that I failed in any of the respects alleged… I recognise the real effect of the cuts on pharmacies and the apparent reliance on the 15% [figure] and the non-disclosure [of how this figure was reached]".

This 15% figure “was referred to and seemingly relied” on in the DH’s own impact assessment of the funding changes, Mr Collins said at the time.

However, even the government has since “accepted that it is not appropriate to rely on the 15% figure”, the judge noted. 

C+D digital reporter Thomas Cox (@CandDThomas) reported live from the court for the duration of the funding cuts appeal. Catch up on events from the first day here, and yesterday’s proceedings here. You can also follow the action on Twitter using the hashtag #CutsInCourt.