Six million people visit a local chemist each day and yet, unlike GP services, this fundamental plank of primary care has received surprisingly little government attention. Now a new strategy for community pharmacy services promises radical reforms. But will they be too late to save many struggling businesses?
The network of more than 10,000 pharmacies in England and Wales has been undergoing profound changes. While the total number of outlets has remained relatively stable, independent high street operators have been disappearing at what, to some, is an alarming rate.
Over the past decade or so, the proportion of pharmacies owned by chains of more than five outlets has risen from 25% to more than 40%. In addition, new in-store supermarket pharmacies have developed quickly and now represent a significant market force. The days of the traditional, pharmacist-owned business may be numbered. One survey has estimated that more than 2,000 will disappear.
The question for the government is whether this revolution in the market matters to patients. Hemant Patel, immediate past president of the Royal Pharmaceutical Society and himself the owner of an independent pharmacy, thinks it does. He suggests that the rise of the pharmacy multiples - large chains such as Boots -changes the relationship between patient and pharmacist.
Independent pharmacists are "familiar, well-known and with a trustworthy face", Patel says. The informality of the setting means that "things which are not mentioned to the doctor are often mentioned to the pharmacist because people do not want to bother the doctor".
The government may not share this view. Certainly, its recent actions have disadvantaged small pharmacies. The historic system of paying a higher dispensing fee for low volumes of prescriptions has been abandoned in favour of a flat fee. What is more, pharmacies with very low dispensing volumes do not even attract the "professional allowance" - a lump sum payment that is vital to the financial security of many small operators. The policy of successive governments appears to have been to encourage fewer, larger pharmacies in the hope that these will be more efficient and offer a greater range of services.
Small operators face other pressures. The NHS reimburses pharmacies for the direct costs of the medicines dispensed on prescription. Reimbursement is reduced to reflect the discount it expects pharmacists to negotiate with wholesalers, but takes no account of whether a pharmacy is a stand-alone business or one of a chain. As a result, pharmacy multiples may achieve discounts greater than that clawed back by the government. Large chains that act as their own wholesalers - "vertically integrated", to use current jargon - can make further profits on top.
For small, independent pharmacies, the future looks bleak. The age profile of proprietors is getting older as few young pharmacists want to invest in the current environment and older ones are unable to leave, locked in by long shop leases.
Whether this enforced stability can continue is another question. Many aspects of the business, such as the dispensing of specialist, high-cost drugs, are simply unprofitable. Patel's experience is typical. "Pharmacists get punished every time they dispense high-cost items," he says. "For most high-cost items, the borrowing costs are greater than the 94p I get back in fees." And despite the government's drive to get large companies to pay small businesses quickly, pharmacists do not receive full payment from the NHS for 90 days.
Meanwhile, all pharmacies, big and small, face competition from supermarkets in the health and beauty market. According to a survey by retail analyst Verdict Research, grocers and supermarkets now have a greater share of the market for toiletries, cosmetics and over-the-counter medicines than the health and beauty specialists. The recent collapse of the office of fair trading's legal challenge to resale price maintenance on medicines may have done no more than buy some time for smaller operators. According to the Community Pharmacy Action Group, representing pharmacy owners, as many as one in four businesses could go under if price-fixing on proprietary medicines is abolished.
Will the new pharmacy strategy make much difference? There are at least some hopeful signs that it will. The strategy envisages greater availability of drugs without prescription, introduction of electronic prescribing and a new role for pharmacists to help patients manage complex medicine regimes - and even to prescribe medicines themselves. To implement these changes, ministers want an overhaul of the contracting arrangements through which pharmacists provide NHS services.
These new arrangements are likely to pay pharmacists more for quality and breadth of service, rather than simply the number of prescriptions dispensed. This should help the small pharmacist prepared to develop new skills, and substantial funding has been earmarked for national pilots. More important, it should be good for patients, who will have better access to health professionals skilled in the management of medicines.
Yet, at the same time, the government has announced that many of the 500 new primary care centres promised in the NHS plan will incorporate pharmacy services. In addition, ministers are prepared to break down barriers that currently restrict establishment of new pharmacies. Both these measures may increase local competition for pharmacy services and push the small independent over the edge.
Many industries go through fundamental restructuring. Why not let the market take its course? A key policy objective of the government, and the Department of Health, is better access to health services - particularly for the disadvantaged. The worst-case scenario would be an uncontrolled contraction of community pharmacies, with disastrous consequences for patients. Even the large multiples are not immune; Boots is closing dozens of smaller, high street branches in favour of new out-of-town sites.
Loss of local pharmacies would particularly hit elderly people and those without cars. And the "chemist shop" may often be the linchpin in already vulnerable local high street parades. A government concerned with the protection of local communities, and addressing social exclusion, will surely want to consider this very carefully.
• Richard Lewis is a visiting fellow at the King's Fund health policy institute.
Mixture of care and community
Mary O'Hara
You can almost touch the walls if you stretch your arms out in the cramped dispensary at the back of Marshall Gellman's pharmacy, which sits inconspicuously between a grocer's and a butcher's in a parade of shops.
Gellman has been dispensing prescriptions to the people of Moston, Manchester, for 45 years. He talks proudly of the local community and his role in it. "I've seen a lot of changes in my time here - from a time when I delivered medicines to people's doors and stopped off for a cup of tea, to now, when my regulars include lots of young people with drug-related problems. What hasn't changed is that I know everyone by name. My staff know everyone on a first name basis".
His business is important, he says, because it serves a cross-section of the community of an inner city. "Lots of people are out of work," he says. "They rely on me to offer good advice and they feel comfortable coming in here. We are local and accessible."
Gellman sees the role of pharmacists as a frontline community service and believes that he, and other independent pharmacists, are at the heart of their communities. He fears independents would risk becoming an historical relic if resale price maintenance (RPM) is abolished - up to 40% of his profits come from over-the-counter sales of branded drugs - and if supermarkets and larger chains increase their already significant advantage by buying bulk from wholesalers.
"Independent pharmacists have a more personal approach," he says. "It is simply not possible for chains or supermarkets to offer the same sort of service, but if the courts decide that the RPM structure should be abolished it could destroy independent pharmacy and the unique services we provide."
Gellman welcomes the government's strategy for community pharmacies, with its aim of positioning them as a key NHS service. "Many in the profession already do much of what the government is suggesting, but I am glad it has finally recognised the importance of community pharmacy," he says.
Jill Hawksworth has been an independent pharmacist for 15 years on the outskirts of Mirefield, West Yorkshire. Her pharmacy, she says, is a lifeline to the remote community she serves. "There are no GP surgeries nearby and people rely on me for over-the-counter medicine. I am the only source of advice available on the doorstep of people often too poor, or too ill, to make journeys to doctors' surgeries or to out-of-town shops."
Services offered by Hawksworth's pharmacy - including home delivery of vital prescription medicines - are only possible because of profits from over-the-counter sales. The prospect of losing this vital source of income is an obvious concern.
She says: "If we lose RPM we could lose community pharmacy altogether - and it is actually the building block on which the success of government plans depends."
