Pharmacists proceed with legal challenge

The Irish Pharmaceutical Union (IPU) and a number of pharmacies are to proceed with a legal challenge to the alleged wrongful and unilateral alteration by the Minister for Health of an agreement for the advance payment of pharmacists participating in the General Medical Services (GMS) scheme.

The outcome of the action is expected to affect more than 1,380 community pharmacy contractors who are alleged to have suffered combined losses of more than €32.3 million due to shortfalls in advance payments.

Because a meeting between the Minister and the IPU last month failed to resolve the dispute, the IPU has reluctantly decided to proceed with legal action, Éamonn Marray, for the union, said yesterday.

Mr Justice Peter Kelly said the case was an appropriate one for admission into the commercial division of the High Court.

While the monetary value of the claim was not particularised, it involved substantial money and the court's findings would have repercussions for all pharmacists involved in the GMS, the judge added.

On that basis, he would admit the case into the commercial court list. He then made directions for the exchange of legal documents and returned the matter for further directions to October 9th.

In the action, the plaintiffs claim an agreement was entered into in 1971 for the purpose of securing the participation of retail pharmacists in the reorganised GMS scheme. That agreement involved the minister making advance payments to retail pharmacists to fund the costs incurred by those pharmacists in providing stocks of medicines to service the GMS.

Between 1971 and 1996, the minister paid advance payments to retail pharmacists in accordance with the 1971 agreement, it is claimed. In June 1996, the IPU and minister entered an agreement for the provision of community pharmacy services which introduced the standard community pharmacy contractor's agreement. A principle of that agreement was the improvement in the terms and conditions of retail pharmacists and community pharmacy contractors participating in the GMS, it is claimed.

The terms and conditions of that 1996 community pharmacy contractor's agreement provided for a review of it after five years.

It was also provided, where there was no agreement following such review, that any matters of dispute were to be subject to mediation and recommendation by another party who would be appointed by the minister after consultation with the IPU's pharmaceutical contractor's committee.

In entering into the community pharmacy contractor's agreement, the IPU said it was relying on the representations made to it to the effect that the 1996 agreement did not affect or alter the advance payments of retail pharmacists or community pharmacy contractors.

However, the minister had in December 2002 unilaterally altered the 1996 agreement by ceasing payment of advance payments to retail pharmacists and community pharmacy contractors participating in the GMS, it is claimed.

The minister also refused to refer the dispute to mediation and recommendation by a third party as provided for in the 1996 agreement.

Because of this breach, pharmacists and community pharmacy contractors had sustained and continue to sustain significant losses in funding the costs of providing the stocks of medicine required under the GMS.

According to the latest GMS payments board annual report for 2004, the estimated shortfall was €32. 3 million. The IPU is seeking declarations consistent with its interpretation of the meaning and effect of the 1996 agreement and an order directing the Minister to specifically perform that agreement. It is also seeking damages for alleged misrepresentation and alleged breach of contract.