Andeep Mangal: High Street chemists need medicine to survive
High Street pharmacies serve their local communities, but the pharmacists who own them are still businessmen and recent changes in regulation have ruffled a few feathers.
Previously, “controlled entry” placed restrictions on where new pharmacy contracts were issued, stunting the growth in the number of pharmacies. It was feared that letting in too much competition would create uncertainty for the existing pharmacies. The goodwill values of these outlets increased, and they were beyond the affordability of potential new pharmacists.
But these restrictions created a barrier to entry which the Office of Fair Trading criticised. In 2005, new rules were imposed on Primary Care Trusts which prevented them from rejecting an application from an operator offering to open for 100 hours a week.
This paved the way for new entrants, leading to an increase in community pharmacies. This is clearly in the public interest, as healthcare has seen a shift towards patient-focussed pharmacies. Consumers now have improved access to more facilities for both health information and medication.
However, this has had a destabilising effect on the industry. PCTs are faced with funding issues, having to stretch their budgets without any certainty on the volume of new applications.
There is nothing to protect existing pharmacies from the business threat they face from a new operator entering their locality. If these businesses are forced to close, or scale down services, then this cannot be good for the public.
Even more worrying are the widespread reports of abuse of opening hours, with operators facing accusations that they are not fulfilling the 100-hour commitment. PCTs have been blamed for not policing this and more robust procedures must be enforced.
Then there are the supermarkets, who can open a 100-hour pharmacy, forcing a community pharmacy out of business before reducing their own opening hours to, say, 40.
Faced with these issues, the Government has proposed reform of the controlled entry system, making PCTs carry out pharmaceutical needs assessments. But in the two years it will take to fully introduce this, it has allowed 100-hour applications to continue.
So with 100-hour pharmacies having been given a lifeline, I predict a deluge of applications, particularly from supermarket chains which will take advantage of slow-moving reform. Indeed, I have learnt that one of the big four is considering putting in over 200 applications,
A move like this would completely change the landscape, to the further detriment of local community pharmacies. Something more needs to be done.
*Andeep Mangal is with Thapers Chartered Accountants and comes from a family of pharmacists