There are questions about some of the evidence presented to the Senate committee hearing into the effects of red tape on pharmacy rules, says Anthony Tassone
Evidence presented by Michael Rhodes of Rhodes Management to the Senate committee hearing into the effects of red tape on pharmacy rules contained many factual errors which need to be corrected.
There were too many errors to be addressed in this column, but I would like to highlight some statements presented as ‘fact’ by Mr Rhodes.
Mr Rhodes told the committee that hospital pharmacists “constitute over six times” the 3,000 pharmacy owners he said there are. These figures do not add up and under Mr Rhodes’ mathematics would equate to 18,000 hospital pharmacists.
According to the latest report from the Pharmacy Board of Australia on pharmacist registrant data, as at 30 September 2017 there were 30,058 registered pharmacists. The Society of Hospital Pharmacists of Australia website says it represents 4,000 hospital pharmacists. Mr Rhodes’ assertion is that most of the pharmacist workforce works in hospital pharmacy.
This is demonstrably incorrect and any recent pharmacist workforce study shows approximately 65 per cent of the pharmacist workforce is employed in community pharmacy.
Mr Rhodes displays a lack of understanding of the PBS as displayed in his evidence on a number of counts. These need to be corrected given the PBS is pivotal to our National Medicines Policy.
He told the committee that he believed there were 1,600 medicines on the PBS when in fact the 2014-15 Department of Health Annual Report – the most recent report that breaks down the PBS listings – shows that at June 2015, the PBS included 793 medicines in 2,066 forms and dosages, sold as more than 5,300 differently branded items.
Mr Rhodes also needs to do a bit more research into the Community Pharmacy Agreements (CPA) if his statement to the committee are anything to go by: “Back in 2015, the Auditor-General criticised the opacity and lack of accountability of how CPA arrangements come about and the lack of transparency in delivering value in those arrangements. Other studies such as the King and Harper reviews have also been conducted and have called for the CPAs and the CSOs, or community service obligations, to be abandoned.”
This statement is wrong. The Harper Review final report did not call for either the Community Pharmacy Agreements or the Community Service Obligation (CSO) to be abandoned. Neither did the Interim King Review Report call for the removal of the Agreements and in terms of the CSO, it listed three alternatives, including one to remove and one to retain the CSO.
The issue of location rules also has proved to be a challenge for Mr Rhodes.
“As we understand it, the location restrictions — I can’t remember the exact algorithm because the guidelines by the PGA is about 80 pages long — in summary, there are limitations on the distances between pharmacies. That’s often abused if you have a pre-accredited pharmacy number, which is when you see pharmacies open up next-door to each other. But there are rules of one kilometre, 1.5 kilometres, two kilometres, five kilometres that restrict pharmacies being opened in certain locations,” Mr Rhodes told the committee in his evidence.
It is astounding just how many errors can be squeezed into just two sentences. The guidelines are not the Guild’s guidelines and they are not 80 pages long. They are administered by the Australian Community Pharmacy Authority (ACPA) which sits in the Department of Health. The ACPA Applicant’s Handbook, cover-to-cover (including the glossary), is 49 pages long.
The specific requirements for each rule are outlined in no more than four pages. Also there are no 2km or 5km location rules – they seem to exist only in the mind of Mr Rhodes, as does the concept of a ‘pre-accredited pharmacy number’.
Mr Rhodes also seems to have some difficulty grasping the details of the Administration, Handling and Infrastructure fee (AHI), including what it stands for, and told the committee: “Right now, the Government pays a pharmacist or a pharmacy — the AHI fee per dispense went from $7.50 to $10.50 in the last Budget. That extracted $600 million extra until 2020 to fund the industry. That AHI fee stands for the admin handling and inventory fee. Let’s look at that: it’s actually paid to the pharmacy owner, yet it’s the pharmacist who bears the cost and liability to provide that service.
Let’s extend this out a bit further. If I’m a pharmacist and I own two pharmacies, three pharmacies, four pharmacies, and I’m doing 200 scripts a day — multiplied by $10 per script dispensed, multiplied by four pharmacies — that’s 8,000 bucks a day that I’m giving to a very privileged ownership group to support the industry.”
The facts show the AHI for 2016-17 is $3.54 for Tier 1. The statutory AHI rises to $3.94 for 2017-18, an increase of $0.08 due to CPI indexation and $0.32 additionally in the most recent Budget in recognition of lower-than-expected volumes. The total cost over three years is $200 million. The $600 million referenced by Mr Rhodes is actually funding for new and expanding patient programs.
As to the 200 scripts a day, date of supply and official pharmacy figures show the average pharmacy dispensed approximately 140 prescriptions a day in 2016-17, with only about 100 of these being above co-payment dispenses.
Mr Rhodes was also incorrect in his statements regarding pharmacies not disclosing the full cost of a pharmaceutical or health benefit. He informed the Senate committee:
“One of the things that is frustrating for pharmacies is that when they’re dispensing medicines and giving customers a tax invoice, you don’t actually see the PBS price. And we’re saying you should see the PBS price, so you do not get overcharged for that medicine. “
This is wrong.
The pharmacist has to print the full cost on the dispensing label under Section 64 Labelling of pharmaceutical benefits – full cost, of the National Health (Pharmaceutical Benefits) Regulations 2017: “A pharmaceutical benefit supplied by an approved supplier must be labelled with the words “full cost” followed by the full cost of the pharmaceutical benefit.”
If a pharmacy can purchase a medicine for less than the Agreed Ex-Manufacturer Price (AEMP) then this price will be captured by the price disclosure mechanism and the Government will decrease the AEMP to that which exists in the market. This is how price disclosure works – the price is linked to what PBS medicines are really being purchased for by pharmacies.
Another “fact” which cannot go uncorrected is the assertion that “eRx is a bit of software provided by a software company”.
The reality is that eRx is a Prescription Exchange Service (PES) that provides for the ‘exchange’ of electronic prescriptions (barcoded) between the prescriber and dispenser ‘activated’ by the patient when they present the hardcopy prescription at the pharmacy. Currently the PES service fee ($0.15) is paid for by the pharmacy and subsidised under the 6CPA.
There are more inaccuracies and questionable statements in Mr Rhodes’ evidence. Healthy debate is to be welcomed if it helps to improve the healthcare system in this country, and the health outcomes of patients. But inaccurate and sloppy evidence like this has no place in such debate, and does not accord the Senate committee the respect and diligence its deliberations warrant.
* Anthony Tassone is President of the Victorian Branch of the Pharmacy Guild of Australia