The Pharmaceutical Services Negotiating Committee & Anor, R (On the Application Of) v Secretary of State for Health

This judicial review concerned the lawfulness of the Secretary of State's package of reductions to community pharmacy remuneration, including restructuring of fees and the introduction of the Pharmacy Access Scheme (PhAS), and alleged failings in the consultation process and in statutory duties. Key legal principles applied were the duty to take reasonable steps to acquaint oneself with relevant material (the Tameside principle), the requirements of a fair consultation (including the need to give sufficient reasons to allow intelligent consideration and response), and statutory duties to have regard to inequalities under section 1C of the National Health Service Act 2006 and the Public Sector Equality Duty under section 149 of the Equality Act 2010.

The court found that although the Department of Health had not disclosed an indicative analysis (the 15% operating margin analysis) and could have done more work on economic impact, the failure to obtain or disclose further analysis did not render the decision irrational or the consultation unfair to the degree required to quash the decision. On the statutory duty complaints, the court held that the Secretary of State had had regard to the duties in s.1C and the PSED and that any differing judgment as to alternative measures did not demonstrate Wednesbury unreasonableness.

The judge rejected the principal grounds of illegality and declined to quash the decision, while noting the Department's failings in disclosure and the regrettable breakdown in relations with PSNC.

This is a first-instance judicial review challenging the process and lawfulness of reductions to community pharmacy remuneration announced by the Secretary of State. The claimants were PSNC (a statutory consultee) and Susan Sharpe (first claim), and the National Pharmacy Association (NPA) (second claim and interested party in the first). Remedies sought included quashing the October 2016 package of changes to the Drug Tariff and associated decisions.

Background and factual posture

• The Department proposed reductions to pharmacy funding in order to meet wider NHS efficiency savings; changes included reducing the establishment payment, consolidating various fees into a single activity fee, and introducing PhAS and a future quality payment.
• PSNC alleged unfair consultation and non-disclosure of important analytical material (notably an indicative 15% operating margin analysis). NPA alleged failure to comply with s.1C of the National Health Service Act 2006 (duty to have regard to reducing health inequalities) and breach of the Public Sector Equality Duty (s.149 Equality Act 2010).

Issues framed by the court

• Whether the Secretary of State failed in the Tameside duty to take reasonable steps to obtain relevant information about the economic impact of the cuts (in particular likely closures) and so whether consultation was unfair.
• Whether the consultation was procedurally unfair by withholding material relied upon.
• Whether the Secretary of State breached s.1C (duty as to reducing inequalities) or the Public Sector Equality Duty.

Court’s reasoning

• The judge reviewed authorities on the consultation and information duties (Tameside, Khatun, Moseley and related authorities) and applied the Wednesbury standard when assessing whether matters were irrationally ignored.
• On information and consultation: although the Department had an indicative analysis based on Companies House data (the 15% figure) and did not disclose it, the court found that further disclosure or additional primary analysis would not have put PSNC into a materially different position nor changed the legal sufficiency of the consultation; the cost and time of further data collection were reasonable considerations. Accordingly there was no breach of the Tameside duty and no unfairness of the kind that would invalidate the consultation.

Subsidiary findings: the judge criticised the Department for non-disclosure of its indicative analysis and for delay in producing material once proceedings were contemplated, but treated these as insufficient to found relief.

The claims are dismissed. The court held that although the Department’s disclosure and analytical work could have been better (notably non-disclosure of an indicative 15% operating margin analysis), there was no established breach of the Tameside duty nor such unfairness in the consultation as to make the consultation unlawful. Further, the Secretary of State had properly had regard to his duties under section 1C of the National Health Service Act 2006 and to the Public Sector Equality Duty; his overall assessment was not Wednesbury irrational.