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 confirmation from Boots UK that it has now closed 581 of its stores as part of its transformation and cost management programme with more to follow. Tesco has stated that it would close a number 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 groups, including Well, Paydens, Cohens, Kamsons, Peak, Jhoots and Weldricks, and many independents have also reported significant losses.
In August 2024 there were just 10,059 community pharmacies (excluding distance selling pharmacies) in England, down 150 since January 2024, 778 fewer since January 2021, and 1,589 less than in March 2015 when there were 11,647 (source NHS BSA). In addition, according to a recent Healthwatch report, there were 48,000 hours of pharmacy services lost in England due to temporary unplanned closures in 2023, the equivalent of 5,800 days. All this is particularly impacting the provision of pharmaceutical care in rural and deprived communities.
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 with 48% of the market and 841 more pharmacies than in January 2021. Medium groups owning 6-99 pharmacies now have 18% market share, up 246 on January 2021. Larger groups, owning 100+ pharmacies, have 33% which is 1865 less than in January 2021.
One benefit is that the independent sector can be more agile and make the required decisions more quickly. Their challenge is that some may not have the capacity and capability to plan and implement the necessary strategies to try and survive.
These outcomes are largely due to the significantly under-funded NHS contractual framework which in real terms is now 40% down on 2015 against rising operating costs. 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. One in six of the remaining pharmacies say that they are at risk of closure in the next twelve months unless funding is resolved.
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 their revenue to strengthen their negotiating team and enhance their lobbying activity following the Wright Review and the Transforming Pharmacy Representation Programme. The election of the new Labour government in July 2024 may give some hope, but we have heard yet more rhetoric and not seen any action. This has caused further delay in any outcomes of negotiations and hence may be too late for some pharmacies.
Another impact of this shift in ownership 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.
The market share of Distance selling (internet) 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 July 2024 there were 411 DSPs, up 42 on January 2021. DSPs still represent a relatively small percentage of total items dispensed, around 6%, and their rate of growth has slowed since the pandemic but still growing. The combination of LloydsDirect and Pharmacy2U accounts for 55% of the DSP sector. Hence community-based 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.
Pharmacy integration
The recent review of the NHS by Lord Darzi, highlights community pharmacy as part of the solution to repair a broken NHS and a shift of healthcare out of hospital and into the community. However, the core funding must be fixed first before new or extended services are introduced.
The devolution of contractual arrangements and health budgets to Integrated Care Boards (ICBs) means that local relationships between Local Pharmaceutical Committees (LPCs), Regional NHS teams and ICBs, and between pharmacy contractors and Primary Care Networks (PCNs) and local GP practices are critical. However, the shift in levy funding to CPE has meant that there is a 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 updates of the Blood Pressure Check and Contraception services plus the 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.
The APPG inquiry into community pharmacy highlighted many of the challenges and opportunities that the sector faces and the actions a 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 and outcomes.
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 only 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 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 various visions and campaigns from the CCA, NPA, AIMp (now renamed the IPA) and the RPS. Some generally credible in their own right, but lacking in cohesiveness and any detailed plan as to how tangible outcomes will be achieved. Many would question why we need so many visions when a single vision, plan and a combined 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. The current status simply allows the NHS and DHSC to continue to divide and conquer. #OneVision #OnePlan #OneVoice
Supplying medicines alone is no longer 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 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 with multiple clinical consultation rooms. They have created and shared a new vision for their pharmacy and developed their team 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.