PSNC Appeal in the Judicial Review case: contractor summary

PSNC Appeal in the Judicial Review case: contractor summary

May 24, 2018

Over the last two days, 22nd and 23rd May 2018, PSNC has been in the Royal Courts of Justice appealing Mr Justice Collin’s Judgment in the Judicial Review case relating to the funding reductions and changes imposed on community pharmacies.

The Appeal was heard by three Court of Appeal Judges – Lord Justice Irwin, Lord Justice Hickinbottom and Sir Jack Beatson.

On the first day of the hearing, Alison Foster QC presented PSNC’s appeal arguments, followed by David Locke QC for the NPA. On day two, James Eadie QC responded for the Secretary of State (SoS) for Health, after which there were replies from PSNC and the National Pharmacy Association (NPA).

The Court of Appeal reserved Judgment, which means that we may not know the outcome of the Appeal process for some weeks.

PSNC will update contractors as soon as more information is available. You can read more about the Appeal process in our FAQs Document.

Summary of the Appeal hearing

The PSNC case was essentially that:

  1. The Court had recognised that the SoS had failed ‘…to obtain a satisfactory analysis of the economic effect …’ but wrongly found that the duty to obtain sufficient information had been fulfilled.
  2. In concluding that the DH did not rely on a 15% operating margin which was stated in the DH indicative analysis (the 15%), the Court had erred in law and ignored the extensive contemporaneous evidence. Also, that the Court had erred in assessing the significance of the failure to disclose the 15% and the Court’s decision that the non-disclosure was not such as to render the process unlawful, was inconsistent with its factual finding.
  3. The Court failed to grapple in any way with our arguments that the purpose of the Drug Tariff is to specify reimbursement and remuneration and provide certainty and transparency about what contractors will be paid.

In making PSNC’s case, Alison Foster QC referred to previous Cost of Service Inquiries on which remuneration had been based. She also said that the Minister had relied on the 15% when announcing the decision on 20 October 2016 and that the clear message was that community pharmacy could afford the funding cuts.

She also referred to a 10% profit margins estimate that came from one person described as an ‘Industry Insider’ whose information had been destroyed after a meeting with DH officials; and also indicated that Tim Ogier of PwC had discredited the 15%.

Alison Foster said that DH wanted to introduce changes without primary legislation and expected that they were likely to have to impose the unprecedented funding cut; that modelling had been conducted which showed various levels of community pharmacy closures; and that PSNC had made numerous requests for this analysis but not been provided with it.

James Eadie QC, responding for the SoS, indicated that there was a need for the Government and the NHS to make savings (Governments must be able to govern) and broadly argued that:

  1. The test for the SoS’s decision-making (and having enough information) was one of rationality and it was not possible to make a reliable estimate of the number of pharmacies that would be at risk of closure; the Court had been right to accept that the SoS needed no further information.
  2. In relation to the 15%: the 15% was but one strand of analysis, it became apparent that the work did not generate reliable results about operating margins and since the decision was not based on it, it did not require disclosure to the PSNC. The purpose of considering closures was in relation to the protective measures necessary to ensure patient access (not on the viability of community pharmacies to withstand the funding cuts). In addition, the PSNC was in a special position to provide relevant information if it wanted to do so. The Court had been correct in its approach.
  3. The purpose of the funding cuts was to save money from the public purse, not to seek community pharmacy closures; and, that nothing in the statutory provisions prevented the SoS from setting remuneration in a way which will have an impact on the market for community pharmacy services.

James Eadie QC indicated that the SoS’s decision sought to reduce the Establishment payment, address the inefficiency of ‘clustering’ of several pharmacies in close proximity to each other; and at the same time ensure patient access through the Pharmacy Access Scheme (PhAS).

David Locke QC, acting for the NPA, included in his arguments that the SoS had not understood his duty ‘to have regard to the need to reduce inequalities … with respect to the benefit they can obtain from the health service’ partly because he had considered the availability of pharmaceutical services rather than the need to reduce inequality of the benefits received.

James Eadie QC included in his response that the duty had been considered extensively and the most obvious impact – the loss of access to a community pharmacy – had been addressed through PhAS.


Posted in: , ,

More Latest News >

Reminder: End of January payment

Community pharmacy contractors are reminded that, due to changes that came into effect with the November 2018 Drug Tariff, they...

Ask PSNC: Quality Payments FAQs

The team at PSNC has received a number of queries on the Quality Payments Scheme. Below are some of the questions asked in recent weeks....