The Competition and Markets Authority (CMA) has raised concerns over the Government's hub and spoke dispensing proposals.

In its response to the government’s consultation on hub and spoke proposals, it warned there might be longer-term competition risks in the supply chain if the market developed so pharmacies’ access to medicines was through an increasingly limited number of hub suppliers.

Although it said the proposals should enable a more level playing field, it added that the complexity of the market and nature of dispensing arrangements ‘may exacerbate this risk’.

The competition watchdog said that the impact of the policy should be monitored, including:

  • Its implementation, how the hub market develops and the impact of this on the wider supply chain.
  • Industry engagement to identify any barriers to competition that emerge, particularly new entrants to the hub market or pharmacies experiencing friction in switching between hubs.
  • And considering policy or regulatory levers that could alleviate those barriers, or encourage competition in the market to deliver better outcomes to pharmacies, patients and the NHS.

The Department of Health and Social Care’s (DHSC) own impact assessment of the proposals, published in February, already highlighted the risk that, if wholesalers chose to offer hub services, the spoke pharmacy might need to purchase all their medicines from the wholesaler. This could lead to a decline of smaller wholesalers and an increase in medicine prices.

However, it said that this risk would depend on the number of hubs that entered the market and the degree of competition between them. The Government’s consultation has proposed that there will be no limits on the number of hubs that a single spoke can contract with.

The assessment concluded that such risks would be mitigated by competition law and the CMA acting on any anti-competitive behaviour. It said that the number of hubs that might arise was ‘difficult to predict’, as was the impact the proposals may have on competition within both the pharmacy and wholesale sector.

The Government’s 12-week consultation ended on 8 June. The DHSC has claimed the changes would ‘level the playing field’ between larger chains and smaller pharmacies.

In hub and spoke dispensing models, routine aspects of assembling prescriptions can take place on a large scale in a ‘hub’ that usually makes use of automated processes. Currently, this model is only possible when the hub pharmacy forms part of the same retail business as the spoke pharmacy, meaning chain pharmacies are the main users of the method.

The Government has proposed two separate hub and spoke dispensing models: one whereby a patient’s prescription is assembled by the hub and sent back to the spoke to make the supply, and another in which the hub supplies the prescription directly to the patient.

There is also a proposal to allow dispensing doctors to access hubs, although they will not be able to function as a hub.

The Pharmacists' Defence Association (PDA) has said the proposals showed a 'fundamental lack of understanding of the role of pharmacists’ in safe and appropriate dispensing, while the Pharmaceutical Services Negotiating Committee (PSNC) said there were 'virtually no financial efficiencies' for pharmacies in the proposals and warned that they were actually 'more likely to add cost' to the community pharmacy sector.

As part of the Community Pharmacy Contractual Framework five-year deal (2019 to 2024), the government committed to pursuing legislative change to enable all community pharmacies to benefit from hub and spoke dispensing models.

The Company Chemists’ Association previously warned that there was not enough service income within pharmacy to warrant a network of hubs.