Pharmacy Landscape
The last 2 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 announcements from Boots UK that it is in the process of closing 300 of its stores, Tesco that it would close 10 of its pharmacies, and Rowlands has set out its ‘close, merge and dispose’ strategy in addition to acquiring 30 of the ex-Lloyds pharmacies in Scotland. A large family-owned group in the North of England, Whitworth Chemists, has been put up for sale and other groups, Well, Paydens and Weldricks, have reported large losses.
These results and actions are largely due to the still under-funded core NHS contractual framework and an unjust reimbursement system which sees pharmacies frequently dispensing medicines for their patients at a loss. This urgently requires a complete overhaul as part of the 2024/25 negotiations and Community Pharmacy England (CPE) must deliver a successful outcome. This is on the back of the substantial increase in contractor funding they have received to strengthen their negotiating team and enhance their lobbying activity as part of the actions following the Wright Report and the Transforming Pharmacy Representation Programme.
Most of the disposals have gone to entrepreneurial independent owners and small to medium sized groups. The result is that there were 10,112 community pharmacies in England in March 2024, a loss of 725 since January 2021, and 1,535 less than March 2015 when there were 11,647.
This has meant a significant shift in the number and distribution of pharmacy ownership within the different sized groups (excluding distance selling pharmacies) since January 2021. The result is that by far the largest sector (47.7%) is now the small independents owning between 1-5 pharmacies. Medium groups owning 6-99 pharmacies now have 17.8% market share and larger groups, owning 100+ pharmacies, 34.5%.
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.
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 challenge and 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.
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.
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.
When we developed the Healthy Living Pharmacy (HLP) model in 2009, we based it on organisational development, leadership of change in culture, capability and delivery plus a greater focus on integration and prevention. Whilst HLP is now an integral part of Essential Services in England, some of the aims and ambitions have been lost in translation.
We have also seen visions and campaigns from the CCA, NPA, AIMp and the RPS. Generally credible in their own right, but lacking how any tangible outcomes will be achieved. Many would question why we need so many when a single vision, plan and voice could unite the sector and move it forward together? #OneVision #OnePlan #OneVoice
The market share of Distance selling pharmacies (DSPs) continues to grow and the acquisition of LloydsDirect by Pharmacy 2U will create an organisation with 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 March 2024 there were 407 DSPs, up 38 on January 2021. DSPs still represent a relatively small percentage of total items dispensed, probably around 5-6%, with the combination of LloydsDirect and Pharmacy2U accounting for 55% of that. Hence community pharmacy still has a very important role in the safe supply of medicines which must be retained and valued as an integral part of a range of health services.
Transacting medicines alone is no longer a differentiator nor a sustainable model for pharmacy in the community. Why would anyone chase prescription volume to then lose more money? Our colleagues in optometry and dentistry are witnessing a déjà vu moment and, like them, pharmacies can no longer be dependent on the NHS for a sustainable future. Whilst embracing the full range of NHS services, they must also develop the non-NHS part of their income including self-care support and 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 together with 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.
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.