Court of Appeal upholds High Court decision on pharmacy funding cuts

The Court of Appeal has today upheld the High Court ruling that the reduction in funding imposed on community pharmacies in October 2016 was not unlawful.

This means that the current community pharmacy funding arrangements will remain in place pending negotiations with PSNC for this financial year and beyond.

PSNC and the National Pharmacy Association (NPA) both brought Judicial Review cases following the Secretary of State’s decision to impose funding reductions on community pharmacies in October 2016. In May 2017 a High Court judge ruled that the decision to impose the reductions had not been unlawful.

PSNC and the NPA both then sought to appeal this judgment. The Appeal cases were heard in May by three Court of Appeal Judges – Lord Justice Irwin, Lord Justice Hickinbottom and Sir Jack Beatson – and their judgment was handed down at 10am today (Thursday 23rd August).

The three Court of Appeal judges upheld the initial High Court judgment, agreeing that the funding cuts and consultation relating to them were not unlawful. In dismissing the Appeals, the Judges said that “there is no principle of law” which would render the funding changes unlawful, “even if a reduction in the numbers [of community pharmacies] was expected”.
Responding to PSNC’s concern about the Department of Health’s (DH’s) reliance on an assumed 15% operating margin for community pharmacies, the Judges agreed: “It was regrettable that the process was not more open.” But they found that “since no such margin was treated as a critical point in the decision, the point could not render the process unfair.”

The NPA’s appeal was also dismissed.

The judgment means the changes made to community pharmacy funding, which implemented a reduction in funding and introduced a new Single Activity Fee, among other changes, will remain in force.
We expect that funding negotiations for 2018/19 will begin shortly and PSNC’s ambition is to return to a collaborative working relationship with the Department of Health and Social Care (DHSC) and NHS England on funding and other matters. The process of rebuilding relationships has been an early priority for PSNC’s new Chief Executive, Simon Dukes.
Further information is included in a summary of the judgment and a selection of Frequently Asked Questions available in PSNC Briefing 044/18: Summary of the Judicial Review Appeal judgment (August 2018).

PSNC Chief Executive Simon Dukes said:
“Since joining PSNC I have been impressed by the positive impact that pharmacies are having every day on so many patients, in some cases quite literally transforming their lives. But I have also heard about the very great personal costs of this as you struggle with the current financial pressures, so I know that you will be disappointed by today’s news about our legal action.
For me, the priority has always been to focus on the future and on getting the best possible deal for patients and community pharmacies when our negotiations with HM Government begin. To achieve that we need to work collaboratively with Government, so my team and I will be continuing our work to rebuild strong working relationships with NHS England, DHSC and with anyone else working for Government.
Community pharmacies play an immensely valuable role in helping patients and local communities and we are in a strong position to do more to help both them and the NHS. In recent months it has been particularly encouraging to hear Ministers and the Prime Minister speaking positively about community pharmacies and recognising the important work that you do. We will need to manage changes, whether embracing technology or offering new clinical services, and PSNC will continue to work through these issues on your behalf.”

PSNC Vice-Chair and independent community pharmacy contractor Bharat Patel said:
“PSNC still very much regrets that we felt that the only option left to us back in 2016 was to take legal action. We have always sought to work constructively and collaboratively with the NHS and Department of Health and Social Care and that remains our strategy to get the best deal for community pharmacy.
As a community pharmacist myself, I am disappointed that the judgment has not found in our favour. However, the process has helped to highlight some important ways in which future consultations on community pharmacy funding should be carried out, and we look forward to working more constructively with DHSC on that basis in the future.
Through the Judicial Review process, we have also gained some useful insight into DHSC thinking and the challenges that are ahead for all of us as the NHS tries to set out a ten-year plan that meets rising demand and embraces innovations such as digital models of care.
PSNC is now focused on the future and on working as closely as possible with DHSC, NHS England and wider Government to find ways to develop pharmacies that benefit pharmacies and their patients, while helping to meet Government objectives. We have been very encouraged to hear the new Secretary of State recognising the value of community pharmacies in helping people to stay healthy and we look forward to working with Government to ensure that pharmacies can continue to do this.”
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