Pharmacy Landscape
The last 2 and a half years has seen a radical remodelling of the community pharmacy landscape. At the beginning of 2023, the Hallo Healthcare Group, the organisation established by private equity company Aurelius following its acquisition of McKesson UK in April 2022, announced the closure of Lloyds Pharmacies in Sainsburys. Since then, it has either closed or sold off the remainder of the group completing their exit from the market in November 2023.
There have also been confirmation from Boots UK that it has now closed 581 of its stores as part of its transformation and cost management programme with potentially more to follow. Tesco has stated that it would close 10 of its pharmacies, and Rowlands has set out its ‘close, merge and dispose’ strategy. A family-owned group in the North of England, Whitworth Chemists, has been put up for sale as individual pharmacies following a reported loss. Other large groups, including Well, Paydens, Cohens, Kamsons and Weldricks, and many independents have also reported large losses.
These results and actions are largely due to the significantly under-funded NHS contractual framework. Then there is the unjust reimbursement system which sees pharmacies frequently dispensing medicines for their patients at a loss coupled with a challenging supply chain resulting in many wasted hours sourcing medicines. The current contractual framework is not fit for purpose and urgently requires a complete overhaul as part of the 2024/25 negotiations. Community Pharmacy England (CPE) must deliver a successful outcome for contractors who have funded a substantial increase in revenue to strengthen their negotiating team and enhance their lobbying and support activity following the Wright Report and the Transforming Pharmacy Representation Programme. However, the election of a new government in July 2024 may give some hope but also cause further delay in any outcomes of negotiations and hence may be too late for some pharmacies.
In June 2024 there were just 10,079 community pharmacies (excluding distance selling pharmacies) in England, a loss of 130 since January 2024, 758 since January 2021, and 1,568 less than in March 2015 when there were 11,647.
There has been a significant shift in the distribution of pharmacy ownership since January 2021. The result is that by far the largest sector (48%) is now the small independents owning between 1-5 pharmacies. Medium groups owning 6-99 pharmacies now have 18% market share and larger groups, owning 100+ pharmacies, 34%.
One benefit is that the independent sector can be more dynamic and make the required decisions more quickly. Their challenge is that they may not have the capacity to plan and implement the necessary changes to try and survive.
Another impact of this shift is that those organisations, suppliers and manufacturers that interface with community pharmacies will have to focus their attention and support on an increased number of contact points. Also, CPE should now re-examine the proportionate representation on their committee.
Pharmacy integration
One potential opportunity for community pharmacy is to become further embedded as an indispensable part of the local health system. The devolution of contractual arrangements and health budgets to Integrated Care Boards (ICBs) means that local relationships between Local Pharmaceutical Committees (LPCs) and ICBs, and between pharmacy contractors and Primary Care Networks (PCNs) are critical. However, the shift in levy funding to CPE has meant that there may be reduced capacity in LPCs to achieve the required local engagement, influencing and support. It is good to see that the NHS have given ICBs some funding (albeit not enough) to support the role of a Community Pharmacy lead for each PCN area. This role requires effective leadership, communication and influencing skills.
Community pharmacy must optimise all of the national and any locally commissioned services by delivering consistently high-quality outcomes and patient experience as part of an integrated health and care system. The recently announced updates of the Blood Pressure Check and Contraception services plus the new Pharmacy First clinical pathway service are an opportunity to demonstrate this. In addition to enhancing credibility across the NHS and community populations, delivering these services should provide much needed and more profitable revenue. However, we should acknowledge that the fees for these services do not reflect the workload involved and value they bring to patients and the health system and as such are unlikely to significantly improve the bottom line of a P&L statement.
The recently published report from the APPG inquiry into community pharmacy highlighted many of the challenges and opportunities that the sector faces and the actions a future government must take to fully recognise and utilise it as part of an integrated health system. The political rhetoric needs to be converted into positive actions.
Pharmacy reimagined
The Kings Fund and Nuffield Trust were commissioned by Community Pharmacy England to write a ‘new vision’ for the sector: Pharmacies of Tomorrow, with evolution continuing to underpin the theme. Change by its nature is disruptive, but evolution is too slow and so often we have seen it delivering more of the same. Whilst some contractors may struggle with the speed of change, the sector cannot wait another 12-24 months if it is to survive, it needs revolution.
This latest vision is very similar to the Pharmacy Voice Forward View Blueprint published in 2016 but never adopted and the single influencing voice was subsequently derailed by some individual and organisational egos. Then we had the judicial reviews which destroyed trust and relationships with the NHS, the then Department of Health, and Government resulting in many lost years of potential progress.
We have also seen visions and campaigns from the CCA, NPA, AIMp (now the IPA) and the RPS. Generally credible in their own right, but lacking in detail as to how any tangible outcomes will be achieved. We even have the rebranded IPA looking to compete with the NPA by changing its membership criteria to include all independents – narcissism at its worst. This simply allows the DHSC to continue to divide and conquer.
Many would question why we need so many organisations and visions when a single vision, plan and voice could unite the sector and move it forward together? All pharmacy contractors have more in common than differentiates them; that common priority is for a new contractual framework with fair remuneration and reimbursement. #OneVision #OnePlan #OneVoice
The market share of Distance selling pharmacies (DSPs) continues to grow albeit at a slower rate. The acquisition of LloydsDirect by Pharmacy 2U will create an organisation with a combined monthly NHS items exceeding 2.7 million. ASDA have recently announced an arrangement to use Pharmacy2U for its home delivery service – another indication of the change in consumer behaviours and the need to cut operational costs. In May 2024 there were 408 DSPs, up 39 on January 2021. DSPs still represent a relatively small percentage of total items dispensed, probably around 6%, and their rate of growth has slowed since the pandemic. The combination of LloydsDirect and Pharmacy2U accounts for 55% of the DSP sector. Hence community pharmacy still has a very important role in the safe supply of medicines and patient-facing care which must be retained and valued as an integral part of a range of health services.
Supplying medicines alone is no longer a differentiator nor a sustainable model for pharmacy in the community. Why would anyone seek increased prescription volume to then lose more money? Like our colleagues in optometry and dentistry, pharmacies can no longer be dependent on the NHS for a viable future. Whilst embracing the full range of NHS services, pharmacies must also develop the non-NHS part of their income including self-care support and OTC treatment, and private services. A number are already doing this successfully with greater leverage of P-medicines, Patient Group Directions and Independent Prescribing from pharmacists and other health professionals within a broad range of private clinical services.
We are already seeing a radical change in what some community pharmacies look like and do. Many of these have enhanced their premises with a greater emphasis on a healthcare ethos and environment. They have developed their skill-mix with an increased role for Pharmacy Technicians. They utilise digital and hardware technologies to improve efficiency, release capacity and support smart communication and marketing. All of this to deliver more clinical services, self-care and a better patient experience which in turn should create a more profitable and sustainable business.
Those who are agile and adapt to reflect the evolving needs of communities, consumers and commissioners of our services should operate successfully as pharmacies of tomorrow. Those who wait for someone else to do it for them may not.