Examination of Witnesses (Questions 100-119)
THURSDAY 3 APRIL 2003
MS SUE
SHARPE, MS
LIZ COLLING,
MR JOHN
D'ARCY, MR
JOHN EVANS,
MR JONATHAN
MAY AND
MR MATTHEW
JOHNSON
100. Overall it is a piece of business, so you
are going to make a profit because you are doing more business
in—
(Mr Evans) We make more money—yes, money from
the pharmacy, yes. So we are looking after customers that are
coming into our stores.
101. But if out of this what happens is that
more money ends up going into the ESPS, does that mean that more
taxpayers' money is effectively just going to support bigger profits
for the supermarkets?
(Mr Evans) There are a few points there. The ESPS
needs to be changed. That supports essential pharmacies with the
PCTs, and we want to have the pharmacies. If ASDA or somebody
else wanted to open up a pharmacy but the PCT did not think it
was essential, it should not get the ESPS for it. I would say
that the regulations should change so that you can open a pharmacy
anywhere, but if PCT wants to open a pharmacy somewhere, then
by all means pay ESPS for that. Some funding will be needed for
that because you will not be giving ESPS to all pharmacies that
are vulnerable because some of them will not be needed—some
are not essential. If there are two pharmacies close together,
you are not going to give ESPS to one of them, are you? I cannot
see a reason why new entrants to the market cannot pay the PCT
for a contract and fund healthcare that way. I do not know how
much that would be, but I would rather pay a PCT funding for the
contract than somebody who was given the contract 16 years ago
and just—
102. To understand that better, you, ASDA, would
pay the PCT in order to front the pharmacy.
(Mr Evans) If we could buy a pharmacy contract with
PCT and open up a pharmacy in that store, yes, we would consider
that.
Jim Dowd
103. On that point, I can quite understand that
every pharmacy in every store needs to make a profit, but what
proportion of the turnover in the pharmacies is prescriptions?
(Mr Evans) In our stores, probably about 77% prescriptions
and 23% over-the-counter.
104. Without that, very few of them would be
profitable and the majority would be—
(Mr Evans) Yes. It is not so much of a profit with
non-dispensing pharmacies. We have got one non-dispensing pharmacy
in Manchester, where we applied for a pharmacy contract and could
not get it for a number of reasons—and there is detail behind
that. So we opened up a pharmacy which just sold pharmacy medicines.
Within the first six days, 94 people came in with a prescription.
They expected us to have a pharmacy which does prescriptions and
sells medicines. They just do not understand the concept of a
pharmacy which just sells medicines.
105. That was the Superdrug experience as well,
was it not, before they—
(Mr Evans) It was, yes.
Siobhain McDonagh
106. Do you understand the nervousness, Mr Evans,
or scepticism that people might greet the role of the supermarket
in providing what is an essential community service? If I can
give an analogy—not your own chain, but certainly two other
major players several years ago took a great deal of interest
in getting post offices into their supermarkets, and clearly made
a judgment that that would attract customers and make money. Now,
those same supermarkets feel that more money could be made out
of the space from doing something else, and many areas in my own
constituency are now threatened with having no post office.
(Mr Evans) I cannot speak on behalf of other chains,
I am afraid. We have post offices in ASDA. What I can say is that
pharmacy is the number one requested service that customers ask
for outside of the core range in the store; so customers want
pharmacies to be there, and that is why we provide it.
107. Customers would appear to want post offices
as well.
(Mr Evans) I am very sorry, I cannot comment on other
supermarkets. I do not know.
Dr Naysmith
108. We have partly covered this already, but
it is to do with some evidence that is in the PSNC submission
about the potential worst-case scenario if this is introduced
and has the effects that are predicted. You suggest that between
1,000 and 6,000 pharmacies might be threatened with closure. That
is a very large number: 6,000 is nearly half of them. Where do
these estimates come from? Can you back them up?
(Ms Sharpe) The figure of 6,000 was the figure given
by the New Economics Foundation, which did a report on the likely
impact of deregulation. Their modelling showed 6,000 pharmacies
at risk. I think there is a point of clarification to make here:
a number of us have said that the result of deregulation would
be at least initially an increase in the number of pharmacies,
and pharmacies would tend to cluster either around GP surgeries,
which is the modelling that the OFT did not undertake satisfactorily,
and the pharmacies within supermarkets. The "at risk"
pharmacies are the pharmacies that are in the local neighbourhood
situation, and I think the figure of 6,000 is really looking at
that neighbourhood locality type of pharmacy, and the risk that
they are stripped out so that people who do not have access to
private transport—(and Mr Burns said they would get in their
cars and drive four or five miles without any real detriment)—it
is those people who are not the highest users of pharmacies who
will be prejudiced. We are not suggesting that there will be a
net closure of 6,000 pharmacies, but that study was undertaken
by one of the policy think-tanks.
109. So it is not fair to suggest that you were
saying about half the current pharmacies might be at risk.
(Ms Sharpe) We are not saying that there would be
a net closure of half of the current pharmacies; we are saying
that the current pharmacies that are in neighbourhood localities
are the ones that would be particularly prejudiced. They are the
ones that provide services to people who do not have easy choice
and easy access to alternatives.
110. You are saying they are potentially at
risk, depending on what local competition springs up; and that
competition might spring up, which would reduce the figures.
(Ms Sharpe) I think we would be very surprised if
local competition did not spring up, but it would be different
in different areas. The proximity of a supermarket will be a major
determinant, and the extent to which there are openings within
GP surgery premises that one would expect to strangulate the flow
of prescriptions out into the neighbourhood communities.
(Mr May) On this question of how many
pharmacies might be under threat if there was deregulation—our
view, which we have expressed I hope this morning, is that we
do not see that as being a significant problem, particularly if
we compare it with the impact supermarkets may have had on other
kinds of shops.
111. What about post offices? You can say something
about those.
(Mr May) I do not know anything about post offices
because we have not studied them. What we do know is something
about pharmacies, and one of the clear things about pharmacies
is that people use the pharmacies they do because of where they
are located: that means it is adjacent to either their GP's surgery
or to their home. Then there is an issue about convenience. Clearly,
if new pharmacies set up, some may be more convenient than the
one you have just used, and therefore you might switch. But if
you add to those strong reasons of locality, convenience and the
experienced staff, which we have also discussed this morning,
the fact that the large proportion of the income comes from prescribing
for which there is no competition, we think the threat from a
new entry, particularly if it is a large entry in the supermarkets,
will be not necessarily minimal, but all the kind of stuff and
the comments we have seen since we have published we think have
been exaggerated for those kinds of reasons. Obviously, you can
form a view on that, but that has to be borne in mind.
Andy Burnham.
112. Coming back to the issue of where the public
interest is being served by the proposals, whether it is more
or less served by doing it, and whether removal of controlled
entry will provide a fair deal for vulnerable social groups, Mr
Evans you said that convenience is what your customers tell you
they want. I am perfectly prepared to accept that that is what
your customers would say that they want; but the issue is about
the people who do not use your stores and who are vulnerable—perhaps
people who do not own a car, whose voices you are not hearing.
What are they saying? Within this context, I point particularly
to the population of people putting business through the local
pharmacy are not the people who are your main customers. People
over the age of 71 cash an average of 13 prescriptions a year.
I do not know the data, but I guess that people over 71 are not
the mainstay of your shoppers. Where is the public interest best
served? Where is the balance?
(Mr Evans) One in five of our customers is a lady
over 65, so old people do get into our stores. That is about two
million people. The same number is true for mothers as well, so
we do cater for these people already. Mr Burnham, I think where
we differ is that you think that pharmacies will close and go
down if deregulation happens. We do not agree with that. I hear
Sue Sharpe telling us now that she thinks numbers will go up and
stabilise afterwards.
113. Mr Evans, you will surely accept from me
that in my area Tesco will open one, and you have already got
one.
(Mr Evans) Yes.
114. All the supermarkets would have one, so
the net—you would probably see them change, but in my view
you would see them taken out of the small surrounding towns, concentrated
on where all the supermarkets are. Net, it may look as though
there has been no change, but actually I represent an area with
high levels of chronic illness—some of these places are
pit villages—with low car ownership and small towns that
depend on the high street. So the figures may not tell the real
story there.
(Mr Evans) I go back to the point I made earlier,
Mr Burnham, that if the PCT identifies an area which needs a pharmacy,
it should help fund that pharmacy, using a new type of ESPS.
115. Does anybody else have a view on—
(Ms Sharpe) I would like to come in on
that because I think this is precisely the issue we are talking
about. Let us build the primary care trusts where services should
be delivered. We are hearing, time and time again, this issue
about "let the PCTs have power to develop proposals for where
new pharmacies should open"—and that is specifically
what our proposals for amendment and development of the planned
system are.
116. Is the heart of this debate that the regulations
we have got are there to protect vulnerable social groups; and
what is proposed is in some instances in the interests of the
mobile affluent groups? Is that not the essential contradiction?
In whose interests are they mostly for?
(Ms Sharpe) Yes, but developed from there, we can
improve the regulation to improve the level of protection, support
and service for those vulnerable patient groups. I think that
is really at the heart of this debate. We do not oppose increased
competition at all. What we are supporting is planned use of this
immensely valuable and, by everybody's agreement I think, thinking
about primary care as an under-utilised resource. That has to
be done sensibly within a planned system rather than within a
free market system.
Dr Taylor
117. Mr D'Arcy, in your written submission you
make a very strong statement on this subject, that the OFT recommendation
flies in the face of the Government's plans for pharmacy. Can
you justify that?
(Mr D'Arcy) Yes, it is a statement that really picks
up on Sue's point. We are saying that we are on the cusp of making
great use of pharmacy and pharmacists' skills, improving pharmacists'
input and improving patient care. That is the policy that is outlined
in Pharmacy in the Future and the various other UK strategies.
Therefore, pharmacy services, as part of overall NHS care, should
be planned and managed. We have plans here, and are all set to
implement them but we have a report that comes in and says "let
us try and do that through the free market". That seems to
be incompatible with the way things are going. Increasingly, power
is being driven down to primary care organisation level. The primary
care organisations in England PCT have the responsibility for
developing a health programme, which is going to be based upon
health need; so it seems to us logical that what we should be
doing is working with PCTs at local level to decide what that
health need is and how pharmacy can deliver it. We have a system
at the moment, which we accept is not perfect but which does work
well. A lot of the report acknowledges that, particularly in terms
of access. It seems to me that we could be in danger of throwing
out the baby with the bathwater. We are taking a big risk here.
We have a system that is not perfect, but is giving us a network
of pharmacies and is acting as a platform delivering new services,
and delivering access; and we are suggesting an alternative model
that is untried, untested—the free market. The debate today
has illustrated in just about every answer to every question is
"who knows; it might be, it might not be". We seem to
be on the verge of taking a big risk. We suggest that in moving
forward we should be building on what we have got, recognising
deficiencies, and dealing with those on the basis of health need
in particular for the needy groups—the mothers with young
children, the elderly, the infirm—particularly vulnerable
groups—and building a modern, high-quality pharmacy service,
which is flexible and adaptable and is actually patient-focussed.
Jim Dowd
118. Are you not presenting this as a somewhat
monochromatic argument; that there are just two poles: you either
have to do it with complete deregulation, or you have to have
complete planning at every stage of provision by PCTs et cetera?
If I understood it, you were saying that you think that under
these proposals 90% or so of the population would be adequately
served, and it is just the other 10% you need the intervention
of PCTs for, to ensure that those people get access to service
as well.
(Mr Evans) I do not think I used those figures.
119. I do not know what the figures are, but
the largest proportion of the population will be served quite
adequately by this, but there will be those you recognise who
will not be, and that is where the intervention of PCTs would
work.
(Mr Evans) Yes. Let market forces choose where to
put pharmacies, and then let the PCT control where extra pharmacies
are needed. The current regulations do not look after people who
cannot get to pharmacies now. They are just there. The pharmacies
now are in locations where they were 17 years ago but—
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