Call for a new model of funding


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A new pharmacy service payment system is required to support disadvantaged Australians, says pharmacist group

With CPA negotiations still underway, the Small Pharmacies Group (SPG) and Rural Pharmacy Network of Australia (RPNA) have joined forces to call for a new model of funding pharmacy services that would focus pharmacists’ attention on patients with the greatest need.

Their statement reads below.


The current pharmacy remuneration system is broken in rural and remote areas and is also failing the sickest and highest needs patients across Australia. The Community Pharmacy Agreement is not adequately recognising the challenges, including the higher per patient workload and associated costs, of delivering pharmaceutical care and services to disadvantaged patients. 

This situation will be further exacerbated if the government pursues savings measures (such as 60-day dispensing), in isolation, and without any plan for better management of disadvantaged and complex patients. RPNA has already warned that the impact of such measures will be particularly detrimental in rural communities where patients are relying heavily on their local pharmacy for healthcare advice and triaging, but the impacts will also be felt in disadvantaged pockets and communities within metropolitan areas.

We suggest that the current ‘throughput’ model where pharmacists are incentivised to maximise dispensing volume and speed at the expense of pharmaceutical care where it is needed is no longer serving Australia’s best interests, especially the disadvantaged segment of the pharmacy market.

This segment of the market includes those with more complex healthcare needs, those living in rural and remote locations, Aboriginal and Torres Strait Islander people, those facing socioeconomic disadvantage, those with poor literacy/non-English speaking background, and those with a disability as opposed to those who are primarily driven by cost and convenience who tend to be younger, higher socio-economic, healthier, and more mobile.

Patients typically visit a pharmacy around three times as often per year than they visit their GP, making community pharmacy a highly accessed health destination. Moreover, there is substantial evidence that community pharmacist-led services can be an effective strategy for improving patient population health outcomes.

Our proposal is for community pharmacies to be financially supported for the delivery of targeted pharmacist interventions based on area demographics and patient need to produce tangible health outcomes and reduce hospitalisations. Community pharmacies should be formally recognised for the vital supportive role they plan in conjunction with GPs by:

  • reinforcing important messages about not only the optimal use of their medicines but also preventative health and risk avoidance
  • working to improve their patients’ health literacy
  • enquiring after patients’ well-being and providing social and emotional support
  • monitoring patients’ treatment progress and adherence
  • helping patients, families and carers navigate their illness,
  • triaging and referring people back to medical care when they are at heightened risk,
  • crisis management (e.g. natural disaster, COVID-19 outbreak).

It is time for the skills and expertise of community pharmacists to be harnessed within the primary healthcare system.

We are not proposing an open-ended, fee-for-service scheme. We recognise and accept that governments have to constrain health funding and we don’t believe the Medicare fee-for-service model is delivering good value as it also gives the wrong incentives to providers.

What we’re proposing is a system of fixed payments to pharmacies, according to the healthcare needs of their surrounding community. The payments would be linked to the pharmacy providing minimum levels of agreed services, but it would be up to the pharmacist and patients’ doctors to prioritise which patients need the most attention and which patients can get by with less.

Payments would cover such activities as medication management (e.g. medication reviews, medication reconciliation, more complex medication consultations, follow up of adverse drug events), monitoring and referral, clinical interventions, advice, and education.

The payments would vary according to the extent of health disadvantage in the population where the pharmacy is located and factors like remoteness, Aboriginality, and low English-speaking background. All these things are known to affect the extent of peoples’ health needs and the ABS collects and holds data that can be used to generate Indices for weighting the payments.

We think our proposal is a win for the taxpayer and for patients – we believe it is possible to design the community pharmacy remuneration system so that the network is sustainable into the future while also ensuring the needs of our most vulnerable patients are being better served.

Small Pharmacies Group represents smaller, independent, owner-operated pharmacies in Australia.

Rural Pharmacy Network Australia is a forum for pharmacists working in rural areas to address the critical issues affecting rural pharmacy.

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4 Comments

  1. Paul Sapardanis
    26/05/2020

    Hopefully a payment system can be designed where claimable rxs are not subsidising the dispensing of non claimable prescriptions . Perhaps this would involve decreasing the dispense fee with an increase in the rate of dispensing. After say 15 rx per hour the fee is halved so to disincentive discounting and high workloads. Something definitely needs to change.

  2. Bruce ANNABEL
    27/05/2020

    These are very thoughtful ideas although perhaps too late with the agreement signing imminent according to today’s article in BioPharmaDispatch. The agreement appears to largely reflect a status quo approach by the government which is undoubtedly an excellent outcome for pharmacy compared with how it was looking prior to virus outbreak.

    • PeterC
      27/05/2020

      Disappointing analysis Bruce. A status quo approach will be far from an ‘excellent outcome’ for (community) pharmacy as a whole: for a start it will advantage CWH (for example) far more than other players, and since their competitive strategy is to destroy the rest of us, it will not be good for community pharmacy diversity and equity of access, or properity as a whole. Blind Freddy can see the discounter model is based on exploiting the current remuneration system that encourages script-throughput and service-commodification. Because CWH do ‘high volume’ better than anyone they have benefited enormously from the last couple of CPAs while more service oriented pharmacies, especially in more disadvantaged areas, have suffered. Maintaining the status quo will simply mean the discount model will continue to grow and prosper and gain market share. We need – and have needed for at least the last 10 years – a remuneration system that actually rewards good pharmacy practice and promotes equity of access to care instead of giving a free kick to people who think of themselves as retailers rather than healthcare providers. The Australian public also deserve no less. The PBS should be about encouraging the best public health outcomes, not about cross-subsidising retail empires.

      • TALL POPPY
        28/05/2020

        If you ever hear the words “I’m a retailer not a pharmacist” from an employer RUN! Then have a laugh to yourself as you just dodged a bullet from a person that cares more about profits than the profession.

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