English health authorities want to reduce costs by encouraging greater use of centralized dispensing model.

The British government is considering new rules that would make it easier for pharmacies to amalgamate.

England’s Department of Health outlined its plan in meetings with pharmacy associations last month. The plan comes hard on the heels of a 6% reduction in pharmacy funding set to commence this October.
It seems clear that you are proposing to radically change the market with a real paucity of knowledge essential for good decision making

That amounts to a £170 million (CDN $320 million) reduction in dispensing or other fees paid to pharmacies in a healthcare system where most drug costs are covered by the government.

It now appear key to achieving this reduction are major changes to the number of pharmacies in the England.

In announcing its arbitrary reduction in funding, the Conservative government said there were too many low-volume pharmacies “clustered” on the “high streets,” or main streets, of English communities.

According to the Department of Health, a “cluster” exists where three or more drugstores are within a 10 minute walk of one another.

The announced plans would make it easier for pharmacies to consolidate dispensing services in a spoke and hub system, with the government paying lower dispensing fees because of volume efficiencies.

For those unfamiliar with the model, the government website gives the following description: “… a ‘hub’ pharmacy dispenses medicines on a large scale, often by making use of automation, preparing and assembling the medicines for regular ‘spoke’ pharmacies that supply the medicines to the patient.”

It has announced a Pharmacy Integration Fund to spur these changes in independent pharmacies.

The Pharmaceutical Services Negotiating Committee (PSNC) has condemned the move. PSNC Chief Executive Sue Sharpe told the government, “It seems clear that you are proposing to radically change the market with a real paucity of knowledge essential for good decision making.”

The PSNC is an independent organization charged with negotiating with the government for pharmacy dispensing fees.

Pharmacists have argued that funding cuts are also at odds with stated government plans to allow pharmacists to treat minor ailments, in an attempt to reduce the number of expensive doctor visits.

There were about 12,000 community pharmacists in England in 2015, an increase of close to 20% since 2005 when restrictions on pharmacy ownership and operations were loosened. In 2015, about 978 million prescriptions were dispensed to a population of 60 million.

The PSNC and the government have both warned that further cuts in funding could come in 2017 and beyond.