Last month’s Health and Social Care Bill paved the way for the establishment of Monitor, an economic regulator with competition powers relating to health and adult social care services, including pharmacy. Lawyer Suzanne Rab (pictured, right) reveals what this means for your practice

 

1. Will pharmacies need to be licensed by Monitor?

Any provider of a health care service for the purposes of the NHS must hold a licence.  Monitor will award licences.  In the consultation on the initial proposals there was general support that the economic regulator’s licensing regime

should encompass all providers of NHS-funded services in England, whether foundation trusts or from the private or voluntary sector.  Details of an exemption regime will be set out in secondary legislation.  Pharmacies should generally assume that they will be subject to regulation by Monitor.

 

2. How will Monitor recover fees for licensing?

Monitor will have the power to levy fees on providers to meet licensing costs.  However, the licence fees must only be used to support licensing functions such as issuing licences, assessment of providers and any related enforcement action.  Monitor will fund other regulatory activities within its remit (including competition inquiries) through funding from an allocation agreed with HM Treasury.

3. How will Monitor and the Care Quality Commission co-operate in operating their different regimes?

Although Monitor will be the economic regulator, the role of the Care Quality Commission (CQC) will be strengthened as a quality inspectorate.  The health bill requires Monitor and the CQC to co-operate in the operation of their respective regimes.  In particular, they have a duty to work to create a single integrated process of licensing and registration.  The government has emphasised that safety must not be compromised in the interests of economic regulation.

4. What protections will be available if Monitor wants to modify licence conditions?

Monitor will have a duty to consult when developing the first set of licence conditions that will be applied to all licensed providers in a specific defined category.

If Monitor wants to amend licence conditions, it will have a duty to consult with providers who will be able to raise objections.  If the number of objections is above a certain threshold (which will be defined in regulations) Monitor will need to respond to the objections or make a reference to the Competition Commission.  The Competition Commission will then have a power to make a decision that is binding.

5. How will Monitor address anti-competitive behaviour by pharmacies and what are the risks of being involved in anti-competitive practices?

Monitor will have concurrent powers with the Office of Fair Trading (OFT) to apply competition legislation in health and adult social care services.  These powers will include a power to levy fines of up to 10 per cent of relevant turnover for breach of the competition law prohibitions on restrictive agreements and abuse of a dominant position.

The competition law powers will work in combination with the licensing regime.  For example, relevant licence conditions could include prohibitions on tying or bundling products or services.

6. How will Monitor address anti-competitive behaviour by commissioners?

The bill contains a power for regulations to be issued by the Secretary of State which will govern procurement by commissioners.  There will be a right for parties with a legitimate interest to complain to Monitor if they believe that commissioners have breached the rules.  The overall aim is to help to prevent commissioners from reaching agreement or taking action that restricts competition.  NHS commissioners will be subject to equivalent rules which prohibit anti-competitive activity as those applying to providers under competition law.

7. What will be the role of Monitor in relation to price setting?

Monitor must publish a national tariff that sets out certain health care services which are or may be provided for the NHS and the method used for determining prices for those services, specifies the maximum price and provides rules for determining the price for health care services which are not specified in the national tariff.  Where commissioning consortia object to Monitor’s proposals, Monitor may make a reference to the Competition Commission, who may veto the changes or put the matter back to Monitor.

8. Will the new regime help create a more level playing field for pharmacies?

The new regime could be expected to promote a level playing field for pharmacies.  For example, one concern highlighted in the consultation was that, under current arrangements, GPs and community pharmacies provide the same services so that when commissioning decisions are made by GP consortia there may be a risk that they will favour their GP practices.  A concern raised by community pharmacies is that discrimination may not necessarily be overt but could take the form of more subtle discrimination such as setting conditions which other providers cannot meet. The Bill provides a framework to seek to ensure that commissioning decisions are based on objective criteria and that the NHS Commissioning Board and GP consortia are subject to competition law requirements.

9. What will happen next and how soon can we expect changes in practice?

The bill will now have to go through a series of readings and amendments before it becomes legally-binding legislation.

The wider changes to the NHS will be completed over the next four years.  The next year will focus on designing and planning the framework.  According to the proposals, the NHS Commissioning Board and the new-look Monitor will come into effect from April 2012 and the first full year of the new system will be 2013/14.

10. What other health care regulatory developments should pharmacists keep in mind?

The proposals must be seen against the background of government and regulatory policy to promote competition in the health care sector.

Competition law applies only to undertakings that are involved in economic activity.  There has been some uncertainty regarding the extent to which this applies to providers of health care that are funded by the state.  The previous government established the Cooperation and Competition Panel to review anti-competitive activity in the health service.  However, this introduced further complexity since it remained possible for both the OFT and the Cooperation and Competition Panel to have power to investigate.  The upcoming legislation giving Monitor concurrent power with the OFT to enforce competition law within the NHS should be seen in this context.

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