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Watchdog: Govt should monitor hub & spoke for competition risks

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Watchdog: Govt should monitor hub & spoke for competition risks

Changing the laws around hub and spoke dispensing may lead to anticompetitive dynamics, the UK’s competition watchdog has said.

In its response to the Government’s consultation on enabling hub and spoke dispensing between separate business entities, the Competition and Markets authority said that while the proposals are “broadly pro-competitive” as they would give independent pharmacies some of the same opportunities as larger chains, there are also possible risks.

The CMA said: “There may be potential longer-term competition risks in the supply chain if the market develops in such a way that pharmacies’ access to medicines is through an increasingly limited number of hub suppliers.

“The complexity of this market and nature of dispensing arrangements may serve to exacerbate this risk.”

The CMA response, published on Friday (July 15) noted that the Government’s own impact assessment says it is difficult to predict how the market might develop after changing the laws as proposed, and that the market would “particularly benefit from ongoing monitoring or periodic review”.

The watchdog called on the Department of Health and Social Care to commit to such monitoring and respond effectively to any anticompetitive trends that may emerge, “particularly in relation to new entry to the hub market or pharmacies experiencing friction in switching between hubs”.

The National Pharmacy Association has been vocal on the need to ensure that hub and spoke dispensing does not lead to anticompetitive arrangements.

Commenting on the CMA’s consultation response, NPA director of corporate affairs Gareth Jones said: “The CMA clearly recognises the potential competition risks from hub and spoke dispensing, which the NPA brought to their attention several months ago.

“We agree with CMA’s call on government to put in place new regulatory levers to reduce those risks.

“The NPA has already suggested a multi-pronged approach, including removing direct to pharmacy and limited wholesaler schemes so that any registered provider meeting standards can operate in this market. Switching hub provider must also be made as easy as possible for pharmacies.

“As everyone knows in health care, prevention is better than cure. So it is good that the CMA is recommending close monitoring of the market from the start, to enable early intervention on reduced competition.”

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