The funding reduction imposed on community pharmacies, and the consultation relating to it, were not unlawful and cannot be quashed, the High Court has ruled. The judge considering the case, Mr Justice Collins, said on 18 May: “I have with some regret concluded that I cannot properly quash the decision”.

PSNC and the NPA had both brought Judicial Reviews of the Secretary of State’s decision to impose the funding reduction, and the cases were heard in a joint hearing in March.

PSNC response to the decision

“PSNC is disappointed with this result”, said chief executive Sue Sharpe.

“Our lawyers and QC felt that we had a good case; and there are serious criticisms of the consultation process and of the Department of Health made in the judgment. Unfortunately, the fact that the Secretary of State has very wide powers to decide what is relevant to his decisions, coupled with the Department withdrawing reliance on analysis they had undertaken means that we failed to establish that the inadequacies in the process were sufficient to make the process unlawful.

“A critical point in the case was the Department of Health’s conduct regarding its analysis of Companies House data which led to a figure of 15% operating margin for community pharmacies. PSNC first saw this figure when the impact assessment was published alongside the imposition on 20th October 2016. The report has since been discredited by experts at PricewaterhouseCoopers. Extraordinarily, although the Minister laid emphasis on this study when announcing the imposition in Parliament and it was repeatedly used in briefing papers disclosed in the litigation, counsel for the Department of Health stated at the hearing that no reliance was placed on it. 

“The judgment also refers to an inaccurate letter sent to the Prime Minister in August 2016, and to the failure of the Department to disclose information immediately after it was clear that proceedings were being considered.

“A mass of information regarding the policy and thinking behind the funding cuts was disclosed through the legal proceedings allowing us, at last, to see the masterplan behind the 17th December 2015 letter which was devised in mid-2015 and which the Department denied existed. Had we seen this when the letter was published, we would have had the opportunity to interrogate and challenge the Department’s thinking, and the consultation period would have been very different. But it was withheld from us.

“The Judge noted the ‘hardships’ that would inevitably be suffered with any reduction in remuneration. We know that the impact on community pharmacies and their patients could be severe in some cases, and we will continue to highlight the impact that this will have on patients, as well as on wider health and social care services and livelihoods. As the Judge noted, there is a real concern about the unintended consequences of the imposition in increasing pressure on GPs and A&E departments.

“On the issue of pharmacy closures, the Judge found that these were a recognised and desired consequence but not the specific intention of the funding cut, noting comments made by the Chief Pharmaceutical Officer about there being too many pharmacies. PSNC could not and still cannot predict the number of closures that will result from the changes – as we all know, community pharmacy contractors, as any business owners, will do anything they can to avoid closures and they will all seek to find ways to survive by reducing costs and services.

The Committee voted unanimously in favour of this legal action to challenge the 20th October 2016 funding imposition given the issues at stake and the lack of a fair consultation with us. Our priority now is to ensure that the valuable contribution that community pharmacies make to local communities and the NHS is never again disregarded as it so clearly was in the process leading up to the letter of 17th December 2015.”

NPA’s response to the decision

The National Pharmacy Association described the verdict as a watershed moment that exposes the flaws in current policy and opens the way for talks about a radically different approach – which sees pharmacies as a solution to longstanding NHS pressures, in deprived neighbourhoods and elsewhere.

Commenting on the verdict, NPA chairman Ian Strachan said:

“The Judge said the decision to make cuts was lawful, not that it was wise.  On the contrary, he comprehensively debunked the risible idea that the cuts are for the good of patients. 

“Overall, this is a compelling judgement that recognises the important role of community pharmacy in primary care, which some Ministers and officials have sought to diminish.   We have also established an important legal principle, namely that the Health Secretary must now have serious regard to the duty to reduce health inequalities when making decisions about the NHS.  This judgement sets important standards in terms of our sector and far beyond.”   

“This is a watershed moment for pharmacy policy.  The flaws in the current Treasury-led approach have been exposed.  We can now focus on changing the direction of policy going forward, and put the matter of the current funding settlement in its proper context. The new Government returned after the general election should seize this opportunity to change course.

“It is a shame that we had to go all the way to the high court to bring this matter to a head, considering the widespread public support for the front line services provided by local pharmacies.

“What is important now is to enter into constructive discussions about a positive way forward for the sector, patients and the NHS.  We want to engage with officials on implementation of a programme for change and improvement which builds on the strengths of our sector rather than seeks to dismantle it.  By working together, we can make the pharmacy sector and the health system overall more efficient, whilst ensuring that no patient is left behind.

“The community pharmacy network is a part of the health service that can truly be said to serve all communities, including the most vulnerable neighbourhoods.  In mounting this legal challenge, we have seen it as our public duty to try to preserve access to healthcare for those in most need.” 

“The Court proceedings exposed a disturbing lack of understanding at the very heart of government about the role which community pharmacy plays in the NHS. The NPA is grateful for the Judge’s recognition of the vital, wide ranging services delivered by pharmacies, including in some of the most deprived communities in the country. A new legal principle has been established, which will help protect those vulnerable communities.  This means that the legacy of this case will influence DH and other decision makers for years to come.”

Mr Justice Collins predicted hardship in deprived areas as a result of the cuts and said that criticism of the Department of Health’s “less than satisfactory approach” is justified, suggested the National Pharmacy Association. 

“He dismissed the Government’s argument that the legal obligation to tackle health inequalities is a lesser duty than the public sector equality duty, which deals with discrimination.

“He also pointed to the “real risk” of putting more pressure on GPs because of cuts to pharmacy services.  Ministers had earlier claimed that the cuts could be achieved without impacting patient care.”

“Significantly, the judgment places on the legal record the importance of pharmacies’ role in primary care, beyond dispensing.  Recent budget calculations by civil servants have overlooked these wider benefits, and this error must not be repeated,” said the NPA.