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The High Court (Collins J) has dismissed a challenge to the lawfulness of changes to funding for community pharmacies.

The changes, which were introduced with effect from December 2016, had the effect of (i) making an individual pharmacy’s funding more proportionate to the number of prescription items it dispensed, and (ii) reducing the annual funding available by about 7.5% by 2017/18. 

Because of the risk that those changes would result in pharmacies having to close, the Secretary of State also decided to protect the funding of any small or medium-sized pharmacy which was more than a mile away from the nearest other pharmacy. The amount of funding available for pharmacies not qualifying for that protection was thereby reduced further.

The decision was the subject of consultation, but the Secretary of State had obtained some limited information about pharmacies’ profitability (suggesting that a typical pharmacy had an operating margin of about 15%) which was not disclosed during the consultation. 

Two industry bodies challenged the decision: one on the grounds that the consultation had been unfair and that the Secretary of State had not done enough to inform himself about the sector’s ability to withstand the cuts, and the other on the grounds that the Secretary of State had failed to discharge the Public Sector Equality Duty and a similar duty under the NHS Act 2006. 

The Judge held that:

(1) Although the information about pharmacies’ operating margins had not been disclosed, that did not render the consultation unfair: the Secretary of State had recognised that it was unreliable and had not relied on it. 

(2) Given the complexity of individual pharmacies’ financial arrangements, it was not unreasonable for the Secretary of State to proceed without trying to obtain more reliable information about their viability. 

(3) The Secretary of State had done enough to discharge his statutory duties, and his decision as to how to give effect to them was not Wednesbury unreasonable. 

James Eadie QC, Sarah Wilkinson, and Tom Cleaver acted for the Secretary of State.

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