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Hub and spoke dispensing: what it means for you

Resources to help dispensing practices understand the implications

November 11th 2015

Tagged: Dispensary guidance news Pharmacy owners' news Scotland England Wales

By Charles Gladwin

There is a growing political will to see greater use made of centralised dispensing and legislative changes in 2016 are planned to increase the extent of centralised dispensing (also known as hub and spoke dispensing): current models typically focus on repeat dispensing of compliance aids.

Under existing legislation, dispensing and supply of dispensed medicines has to be done by the same legal entity. As hub and spoke dispensing efficiency increases with greater volume it is something that the larger pharmacy multiples have adopted, although some smaller chains have also introduced repeat dispensing hubs into their own business.

Regulatory changes in 2016, however, will allow more than one legal entity to be involved in the dispensing process, paving the way for buying groups or federations of businesses and even, member organisations, to set up dispensing hubs on behalf of members, and across professional boundaries.

This change is intended to allow all spoke pharmacies to significantly free up workload so that pharmacists are able to spend more time with patients to help reduce GP workload. There are possibly accuracy gains as well from use of automation. However, fears have been raised that increased use of hub and spoke may lead to a reduction in dispensing fees, and estimates have suggested that cuts could run into hundreds of million Pounds – and that is before the fee is shared between hub and spoke.

Department of Health estimates suggest that two thirds of dispensing volume could be dealt with by hub and spoke,  but the large pharmacy multiples, whose experience of hub and spoke goes back to 2008, question the potential cost savings and benefits of hub and spoke posited by the Department of Health.

Among the confounding factors are the practicalities of fridge lines and cold chain monitoring, as well as controlled drugs, the potential effect of the Falsified Medicines Directive, and of reducing dispensing fees on pharmacy viability – which could see minor ailment workload transfer back to GPs and other NHS services.

Dispensing practices will share many independent pharmacy sector concerns; in particular the effect of reducing dispensing fees on the wider practice service provision, and the potential for dispensing patients to opt to use non GP-owned hub dispensing services. If hub services gain excessive market share, they may also be able to impose unfavourable trading terms on the spoke operation.

Small contractors, particularly those in very remote locations may also fear the effect on their wholesalers’ business terms if dispensary stocks are significantly reduced – although wholesalers say they will retain a role as a ‘stock room’ for practices.

Since Pharmacy Voice* advocated a freeing up of hub and spoke legislation in April 2014 to level the playing field for all pharmacies, the collective view of pharmacy has become increasingly less well disposed towards the system. The pharmacy sector knows that it cannot just say no to the national departments of health so has to propose a viable alternative that will satisfy health ministers and civil servants.

Dispensing doctors will be affected so the DDA is getting involved in the discussions. Whether the sector as a whole can formulate a shared policy on hub and spoke, or whether the multiples and the independents adopt different stances is still under consideration.

A range of resources has  been placed in the dispensary management zone to enable members to consider the following areas, and their implications for practice:

  • Time line of hub and spoke developments
  • Defining hub and spoke and different models
  • Business and ROI consideration
  • Considerations affecting cost-effectiveness
  • Legal considerations and professional expectations
  • Potential professional benefits
  • Professional concerns: Devaluing the dispensing fee
  • Professional concerns: ‘Amazon-isation’ of dispensing

The DDA would like to thank Andy Beesley of Medication Management Solutions, Celesio, ARX, the BAPW and other industry sources for their input.

*Pharmacy Voice brings together the pharmacy owner organisations (the National Pharmacy Association, the Company Chemists’ Association representing the large multiples, and the Association of Independent Multiple pharmacies – AIMp)

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