Mr Desmond Swayne (New Forest West, Conservative)

In many respects, my constituency is patchy with respect to the coverage that can be had from pharmacists—we are certainly talking about many more than the three miles that were mentioned this morning by the hon. Member for Isle of Wight (Dr. Brand). That position would be much worse if one or two strategically placed independent pharmacists were to find themselves in greater difficulty because of current trading conditions.

My constituency is served by independent pharmacists. Although the total number of chemist shops in the United Kingdom has remained stable at approximately 10,000, the composition of those shops has changed significantly. Over the past 10 years, the proportion of chemist shops that are part of a chain of more than five shops has risen from approximately 25 per cent. to 40 per cent. There has been quite a concentration in the market with the growth of chains at the expense of independents.

The smaller independents inevitably face various disadvantages, such as the fact that a flat fee is paid as part of the system, whereas in the past, fees took account of the low volumes used by smaller independent outlets. The national health service expects pharmacies to negotiate discounts with wholesalers, and reimbursement is based on that. It does not take account of the differential ability of small independents to negotiate significant discounts with wholesalers. There is the additional question of the high-cost item for which the fee fails to reimburse the small independent for the cost of his borrowing while he waits 90 days to be reimbursed for the cost of the item.

It is for those reasons that many independent chemist shops have disappeared. I believe that the change in the structure of the market because of the disappearance of the independent can profoundly alter the relationship with the pharmacist. It is precisely because of the informal circumstances in which people meet their independent local pharmacist that they are able to obtain more information from the pharmacist than from their doctor. I would argue that local pharmacists provide a different quality and level of service.

The provisions in the Bill offer greater opportunities for independents. There is every prospect that the LPS arrangements will play to the strengths of the independents in the quality of the service that they offer. It would be tragic if at the same time, the control of entry criteria were changed to the extent that competition knocked many of those independent suppliers over the edge and drove them out of business. I am essentially seeking reassurance from the Minister. Will he describe the circumstances in which the control of entry criteria will be changed or removed in their entirety so as not to bring about a faster change in the structure of the market, with the disappearance of independents, than has already been the case, most regrettably, over the past 10 years?

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

I think that I can give the hon. Gentleman the reassurance that he seeks. We have already discussed the relationship between proposed LPS pilots and existing contractors. Clause 38 seeks to deal with the relationship between LPS pilot schemes that are already in operation and new applications under the national arrangements. If a pharmacy moves from national arrangements to an LPS pilot scheme it will typically still remain in competition with other pharmacies, and it would be odd if such pharmacies were afforded less protection than they had before.

Clause 38 is designed for the circumstances that the hon. Gentleman described. If a pharmacy takes advantage of LPS and believes that it has particular strengths to move in that direction, it should not lose the protection that it would have had under the national arrangements. Clause 38 will ensure that pilot scheme pharmacies are taken into account when health authorities decide whether existing services in the neighbourhood are adequate.

Sir George Young (North West Hampshire, Conservative)

Can the Minister give a similar assurance in respect of the circumstances that we discussed this morning where pilot schemes are provided not under LPS but under PMS? Will they be similarly safeguarded?

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

We discussed the role of PMS in providing innovative services. There is conceptually a difference between a PMS pilot or any other service that is restricted to dispensing to the patients of a particular practice and a LPS scheme or general national contract pharmaceutical service scheme that provides dispensing services to all the patients in the area who hold an NHS prescription. We are doing nothing to change the existing provisions, but the right hon. Gentleman's example is not analogous to the provision for local pharmaceutical service schemes, which is particularly to ensure that a pharmacy that enters into a pilot scheme is afforded the same protection that it would have had under the national contract.

Sir George Young (North West Hampshire, Conservative)

I am not sure that I have fully understood the Minister. Is he saying that what can be provided under PMS is more restrictive than what is provided under LPS? The final sentence of paragraph 4.12.3 of ``The Health and Social Care Bill: Local Pharmaceutical Services'' implies that the same services can be provided under either PMS or LPS.

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

I confess that I am not quite sure to what the hon. Gentleman is referring.

Sir George Young (North West Hampshire, Conservative)

It is the document that has helpfully been provided called ``The Health and Social Care Bill: Local Pharmaceutical Services''. I will read out paragraph 4.12.3 in order to give the Minister's officials time to concoct a response. It says:

``The opportunity for innovation within a local contract therefore already exists, and it is likely simply to become confusing if the same services could be provided under either PMS or LPS.''

I took that to mean that it did not matter that a general practitioner was precluded from applying for a pilot scheme under LPS because he could apply under PMS and do exactly the same. However, in his response a few moments ago about the protection provided under clause 38, the Minster was unable to give me the assurance that I was seeking, that somebody who provided exactly the same services under PMS would receive protection under clause 38. I wanted an assurance that whichever door one knocked at to provide the services, one would receive clause 38 protection.

Mr John Denham (Minister of State, Department of Health; Southampton, Itchen, Labour)

I set out in earlier discussions the distinction that we draw between dispensing doctor arrangements and pharmaceutical services and the reason why we do not apply the same entry criteria and competition criteria to the two. On the question of how that affects the PMS service, I accept that there is a contradiction between what I have just said and the document that I circulated previously. It may be helpful if I write to the right hon. Gentleman to clarify that point.

Question put and agreed to.

Clause 38 ordered to stand part of the Bill.