Examination of Witnesses (Questions 1-19)
THURSDAY 3 APRIL 2003
MS SUE
SHARPE, MS
LIZ COLLING,
MR JOHN
D'ARCY, MR
JOHN EVANS,
MR JONATHAN
MAY AND
MR MATTHEW
JOHNSON
Chairman
1. Colleagues, could I welcome you to this session
of the Committee, and particularly welcome our witnesses. Could
I place on record our thanks for your participation in this inquiry
and for the written evidence we have received from witnesses and
from a number of other interested individuals and organisations.
Could I ask you each briefly to introduce yourself to the Committee.
(Ms Sharpe) Sue Sharpe. I am Chief Executive of the
Pharmaceutical Services Negotiating Committee that specifically
represents community pharmacists in their provision of NHS services.
(Ms Colling) Liz Colling from National
Cooperative Chemists, Community Pharmacy Contractor.
(Mr D'Arcy) I am John D'Arcy from the National Pharmaceutical
Association. We represent the owners of community pharmacies throughout
the UK.
(Mr Evans) I am John Evans. I am the Superintendent
Pharmacist for ASDA Stores Limited.
(Mr May) I am Jonathan May. I am a director of the
Office of Fair Trading, responsible for this and a number of other
market studies.
(Mr Johnson) My name is Matthew Johnson, I am a team
member on the OFT pharmacy inquiry.
2. Could I begin by asking the OFT witnesses
to tell us a bit about the background as to why you undertook
this inquiry and produced this report. What were the reasons?
(Mr May) Very briefly, the Government has said that
the way regulations/legislation impacts on markets and consumers
is an issue of some importance. It has said this in a number of
White Papers, most recently in the Competition White Paper, and
it has asked the competition authorities, the Office of Fair Trading
and the Competition Commission, to look at regulatory issues and
make recommendations. The Government has said that if we do that
then it will be committed, in a sense, to responding to our recommendations.
The set up is very clear: we, in a sense, look at the market,
we cover those kind of issues which we think are consumer and
competition related and obviously we will have a view on that—and
we have a view in this area—and then it is for ministers
and Government to decide what to do with those recommendations.
Clearly they can accept them, they can reject them or they can,
in a sense, do something in between. That is the set up. The reason
why we looked at the pharmacy market is because it is clearly
a very large market. It is of great importance to a whole variety
of people in the country—everyone has a prescription at
some time dispensed to them—and we have this particular
system of control of entry into the market and, in theoretical
terms at least, entry controls you would normally expect to make
markets work less well because they are restricting the freedom
of people to enter and exit.
3. How did you go about the inquiry? How did
you compile your report?
(Mr May) We did a number of things. Clearly we talked
to all the major stakeholders, the specialists, the experts, the
individual pharmacists, the multiples and some of the supermarkets,
and then we did a series of background work, one of which was
a consumer survey, where we asked people, for example, who had
had a prescription dispensed over the last six months a series
of questions about, for example, why they used the pharmacy they
did, what they thought about it. We carried out a survey of pharmacists
themselves, all kinds of pharmacists to see what kind of services
they offered and so forth. We did a fairly extensive and quite
complicated kind of mapping exercise of the location of pharmacies
and how things have changed, and then we did some scenario planning,
if I may put it that way, looking at "what would happen if
something happened".
4. Did your work include spending time within
a community pharmacy to see exactly what happens? A couple of
years ago, I spent two and a half days in community pharmacies
in my area and learned a great deal about the extent to which
health advice is given to people by pharmacists. Is that an issue
you looked at? Would you be able to indicate how much health advice
is given by pharmacists freely and perhaps have any calculation,
any estimate, of savings to the NHS which occur as a consequence
of the advice given in community pharmacies?
(Mr May) Could I give you a general answer to that
question and then, perhaps, Matthew could say something, if that
is all right with you. We recognise quite fully the importance
of pharmacies, in a sense, as a front line in offering individuals
advice—and that is instead of going to see the doctor and
so forth. I am aware, because I go to pharmacies from time to
time, that one can actually ask them for advice and that is very
helpful. We are well aware that in some countries actually the
role of pharmacies is much greater: they are used as an alternative
to going to see a GP and they can dispense medicines, say, which
in this country only GPs can. We are fully aware of the importance
of that role and the value which people attach to it. I think
that comes out in our report—at least I hope it does. Perhaps
I could ask Matthew to add something.
(Mr Johnson) In the course of the inquiry, members
of the pharmacies team did visit various different pharmacies
of different sizes. Also pharmacists from the different groups—from
the supermarket group to the larger multiples, to the very small
chains—came into the OFT and gave us their views and opinions.
To get a wider picture of the pharmacy market, we also looked
very closely at the trade press and all the other information
that surrounds the pharmaceutical market.
5. Bearing in mind we are told that the Treasury
are quite supportive of the arguments you have put forward, looking
at it the other way round, did you come up with any estimates
of what the Treasury saves as a consequence of the current role
of community pharmacies in giving people free health advice within
their shop?
(Mr Johnson) No, we did not. I think it would have
been impossible.
6. Can you give a guesstimate? It is clearly
a factor that must be brought into the discussions we are having.
(Mr May) I think it is fair to say that I have seen,
in a number of publications, estimates of the time, the importance
of the time spent and the value it has in terms of relieving pressure
on GPs most particularly. I think I have seen some figures attached
to it, although, I do apologise, I cannot for the life of me think
what those figures are. Certainly we would accept that they play
a very valuable role in giving advice.
7. I do not know whether any of the other witnesses
from a different perspective can answer that specific point. It
is a fairly important point. Ms Sharpe, is it anything your organisation
has looked at?
(Ms Sharpe) In terms of hard evidence, I do not think
that we have the collective picture. I think probably the most
useful figure would be the figure that has been given of the amount
of time that pharmacists can save on repeat dispensing, if they
take that workload away from GPs, and the figure given was 2.74
million GP hours, which equates to very many hundreds of millions
of pounds to the NHS simply on that one specific service, leaving
aside the areas of advice that you are picking up. But I am afraid
I have not got a full figure.
8. Could I come back to you, Mr May. Your report
talks about ". . . entry restrictions to any market result
in prices being higher, innovation lower and quality of service
poorer." Would you say it is appropriate to apply such market
logic to a sector which is an integral part of the NHS and where
performance criteria cannot be measured simply in terms of price?
(Mr May) I think it is certainly an appropriate criterion
to apply. As I explained earlier, Chairman, in a sense we look
at the issue from one perspective and then clearly ministers will
look at the issue from a much wider perspective. I think it is
fair to look at it in that regard, firstly, because, in a sense,
people are consumers when they use pharmacies: they go there to
do more than just get their prescription dispensed to them. Secondly,
private businesses and private individuals run pharmacies: they
make decisions on investment, whether to stay in business, whether
to expand, whether to pull out. These are all what you might call
market decisions, so I think it is perfectly proper and I think
it is enlightening too, in a sense, to apply that kind of analysis
or thought process to the problem. I would say that is our role—and
I hope we have done it reasonably well—but clearly there
are other factors. In setting up this system, I explained in the
beginning, it is quite clear to us and it is quite clear to the
Government that our role here is to make recommendations, is to
look at markets, and then it is for ministers to apply those wider
policy considerations of which, clearly, in the health area there
are very many. I do not think I would say that we should not look
at this kind of market.
9. You mentioned the steps you took, the surveys
you undertook. What view do you have of the public need for changes
that you are proposing? Also, what feeling do you have of the
public support, if any, for the direction of travel that you are
suggesting?
(Mr May) I will try to answer that in two bits. It
is clear from looking at Government thinking in this area, the
proposals on pharmacies, that they want to see changes in terms
of service provision, they want to raise, in a sense, the quality
and the kind of things that pharmacists do for people. We know
from the surveys we did, for example, that some pharmacies will
provide what we might call better kind of services—I mean
to say that they will have longer opening hours, they will have
a consultation area, they will deliver medicines to the home.
These are all very important things in terms of wider health policy.
It is quite clear that people value that. Therefore one might
say that the Government is clearly looking for change and one
can also see that in terms of pharmacy provision across the patch
in some areas it is poor and in some areas it affects the more
deprived and the older groups, for example. So I think that is
certainly the case.
(Mr Johnson) You asked about what support there was
from consumers. There has been a clear published response from
the Consumer Association and the Scottish Consumer Council. They
have both come out strongly in favour of the report.
Dr Taylor
10. One of the many, many letters I have had
has raised the question of the credibility of the report at all.
Is it true that the Director General of the Office of Fair Trading
was recently a highly paid consultant for a supermarket chain?
(Mr May) John Vickers I think has made the position
on this clear. When he was not the Director of Fair Trading, when
he was an academic at Oxford, I think, which is going back some
years, he did advise supermarkets on, I think, a potential merger.
Recently, when, as I am sure you are all aware, there was this
case about taking over one of the main supermarket chains, he
took the decision to pull out of any part of the decision-making
process. He felt that in this case, whilst obviously supermarkets
are involved, the involvement is, in a sense, a small part of
the overall picture and therefore he did not think—and I
think the advice we had—he did not need to pull out. I think
it is very important we accept that.
11. So we can be assured that he has no connection
with supermarkets now.
(Mr May) Oh, yes.
Mr Burns
12. Could I pick up on the point Mr Johnson
just made, that the Consumer Association and the Scottish Consumer
Association have expressed support for the OFT report. On what
do they base their support? Is it on their view or have they consulted
consumers? Because every Member of Parliament around this table
has an electorate on average, I suspect, of somewhere between
69,000 and 75,000. I have 76,000. All voters are, by definition,
consumers as well. I have already had petitions with just under
4,000 of my constituents signing petitions against the OFT report.
That is about 5% of my electorate. I can assure you that the other
95%, if they have a view, will not necessarily agree with your
report. On what basis have the Consumers Association come up with
a view supporting your report?
(Mr May) I think—
13. I was hoping Mr Johnson would answer, since
he made the statement.
(Mr Johnson) Okay. Obviously the Consumer Association
is there to represent its members, which are obviously consumers,
and more generally to represent consumers in this country. That
is the whole point of the organisation.
14. Yes, I understand that.
(Mr Johnson) I understand that there has been feeling
on both sides. Obviously many MPs have received—
15. No, I am sorry, could I go back. The statement
that the Consumers Association broadly supports the OFT report,
is that based on their view as a body or have they consulted consumers
before that view? Because it is two different things.
(Mr Johnson) You would have to ask the Consumers Association.
16. So we need not take at face value then that
consumers, through the Consumers Association, necessarily support
that.
(Mr Johnson) Yes, I do understand that they did consult
consumers through a survey.
17. They did.
(Mr Johnson) Yes, the Consumers Association did consult
consumers through a survey.
18. And do we know how many?
(Mr Johnson) We do not know how many.
Julia Drown
19. In terms of quality of service and level
of innovation, how much would you say your report was looking
at that? In so far as you did, do you have any concrete evidence
to suggest that your recommendations would actually improve innovation
or service delivery if pharmacies were de-regulated?
(Mr May) In general terms, if people want to enter
a market and go through the raising of capital, finding some way
to do it and so forth, they clearly believe that they can meet
a demand, they can satisfy consumers in some way. In a market
like pharmacy, where there is a large number of pharmacies, clearly,
in order to do that, they have to think they have something particular
to offer. It may be an area where there is an absence of adequate
pharmacy services, for example, so they would be adding to the
pot of pharmacy services. They may think they can offer, let us
say, better services in terms of helping patients or maybe in
the services they give to patients: after hours delivery, repeat
prescription help and that kind of thing. They may offer better
consultation, they may offer better opening hours. There is a
whole variety of things. In the markets, it is people coming in
and people going out which tends over time to lead to change.
I think we can see that. We can see that, for example, in some
areas—and it is only in some areas—in quality of service
the supermarkets have the potential to offer, say, longer opening
hours. There always is a problem, say, at the weekend, almost
wherever you are, in terms of getting access to a pharmacy. There
is normally one which is available, but it may not be very convenient.
For some people, if a supermarket had a pharmacy and it was open
that would be a big improvement. But there is a variety of ways
in which this can happen.
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