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NPA: Competition watchdog will look at hub and spoke concerns


NPA: Competition watchdog will look at hub and spoke concerns

By Neil Trainis

The National Pharmacy Association has said it is confident the Competition and Markets Authority will look into its concerns that hub-and-spoke could initially be monopolised by a few companies and disadvantage pharmacies, the NHS and taxpayers.

A meeting this week between the NPA and CMA explored potential difficulties of opening the model up to separate pharmacy businesses and introducing two dispensing systems, both of which are undergoing a consultation; one where a patient’s prescription is assembled by the hub and sent back to the spoke to make the supply, the other in which the hub supplies the prescription directly to the patient.

The NPA said it warned the CMA that in the early stages of rollout, there may only be a few companies providing “fully comprehensive external hub dispensing services” which could create competition issues and urged the regulator to ensure there is a “fair and competitive market for hubs…to avoid unintended consequences such as price rises and poor service.”

“The CMA listened closely to our arguments and we are confident they will give the matter their expert consideration. We can’t say for certain how they will respond or by when,” the NPA’s director of corporate affairs Gareth Jones told Independent Community Pharmacist.

“It would seem sensible to examine the competition impact of this model both in advance of implementation and then again in the light of experience.”

NPA vice-chair Nick Kaye, who was in the meeting, said hub-and-spoke could put pharmacies “in a weak position as customers” as well as lead to an increase in medicines prices if a few companies providing a hub are allowed dominate the market. 

“If pharmacies are truly to benefit from hub and spoke dispensing, there needs to be a dynamic and competitive market in which hubs compete for the custom of pharmacies on the basis of quality service and price,” he said.

“Significant capital investment is necessary to set up a hub as well as ongoing costs. This, together with the current restrictive wholesaler distribution arrangements, presents a formidable barrier to market entry.”

The NPA urged the CMA to carry out a post-implementation market review on hub-and-spoke but it remains unclear whether they agreed to this.

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