Reaching an agreement: the 6CPA report card

George Tambassis and then Health Minister Sussan Ley sign the 6CPA.
George Tambassis and then Health Minister Sussan Ley sign the 6CPA.

As we pass the halfway mark in the life of the Sixth Community Pharmacy Agreement, we look at how it’s worked for pharmacy. By Chris Brooker

Remember the Sixth Community Pharmacy Agreement? Well, it’s now been more than three years since then-Health Minister Sussan Ley and Guild leaders signed off on the 6CPA.

So what’s happened in the meantime? Have the objectives and targets of the Sixth Agreement been met? Has it worked for pharmacy?

With the beginning of the Seventh Community Pharmacy Agreement negotiation process now imminent, we thought it was time to take a look back at the 6CPA, and seen how it’s been tracking now it’s moved past its halfway mark.

6CPA: 10 key components

To jog your memory, here’s some of the agreement’s key measures

1 – A new Administration, Handling & Infrastructure (AHI) fee was introduced. This effectively de-linked dispensing remuneration form the price of PBS medicines, and was tiered so that the fee applicable to the most expensive PBS medications would remain in line with the then-current markup (to a maximum of $70) – a big tick from everyone A+

2 – The dispensing fee went up by 17c on 1 July 2015, and was then annually indexed to the Consumer Price Index from 1 July 2016 – A

3 – The Dangerous Drug Fee rose by 21c to $2.91 (it’s first rise since 2006) and was also CPI indexed from 2016 – A

4 – Allowing PBS co-payments to be discounted by up to $1, ostensibly to reduce costs to patients. This was the most controversial measure, and despite a later commitment to review this (in the 2017 Pharmacy Compact see below) it remains in place – D

5 – A major expansion in professional services funding was a crucial component – with $1.26 billion allocated over the five year life of the agreement, including:

  1. $613 million for continuing community pharmacy programs,
  2. $600 for new and expanded programs and
  3. $50 million to trial new pharmacy programs

Welcomed by all, but with some concern over which programs were to be funded, and whether trials could be decided and measured in enough time. Some of these concerns still remain – B-

6 – A commitment to maintain location rules through to 2020, with a review during the life of the agreement – A-

7 – A remuneration review to be conducted during the life of the agreement and set to inform the 7CPA remuneration agreements  – the recently tabled ‘King’ Review, from which pharmacy has emerged largely unscathed, but after quite a lot of angst Pass C+

8 – Continuing and maintaining at existing levels the Wholesaler Community Service Obligation – this left wholesalers unhappy and continuing to demand action to remedy their largely PBS-cut imposed deteriorating financial position – C-

9 – Flagging of the government’s intention to alter the structure of remuneration for chemotherapy infusions – this seems to have largely resolved a long-running issue B

10 – The announcement of pharmacy-level substitution for biosimilar medicines, as a means of increasing uptake of this rapidly expanding category of medicines – early days but offers a new professional role for pharmacy B

Subsequent changes

In the2017/18 Federal Budget, the government recommitted to providing the full $600 million promised in the 6CPA for new and existing community pharmacy programs.

It was announced that this money would be spent on the following programs:

  • Dose Administration Aids ($340m of $600m)
  • Staged Supply ($80m of $600m)
  • Expansion of MedsCheck and Diabetes MedsCheck program ($90m of $600m)
  • Inclusion of follow up services for Home Medicines Reviews ($60m of $600m)
  • Incorporating medication management programs within Health Care Homes ($30m of $600m)

Pharmacists providing 6CPA-funded medication adherence and management services will provide patient data to the 6CPA Program Administrator at the time of the initial service and at a six-month follow-up consultation, to demonstrate the impact of these services on patient health outcomes.

Data collection for Staged Supply began on 1 July 2017 and data collection for the Dose Administration Aid, MedsCheck and Diabetes MedsCheck programs will begin from 1 February 2018.

Requirements for the Home Medicines Review program were still to be finalised.

These measures were part of an unprecedented Compact between the Guild and the government, which also saw the latter commit to remove the sunset clause on pharmacy location rules, provide $200m support for pharmacists in recognition of lower than expected script volumes in the preceding financial year and provide some compensation to both pharmacies and wholesalers for reduced remuneration due to the government’s agreement with Medicines Australia to reduce PBS costs.

What the public said

The 2017 version of the UTS Pharmacy Barometer, surveying the attitudes of 360 pharmacists – owners, managers and employed pharmacists – working in community pharmacy, revealed slowly rising satisfaction with the 6CPA as it moved through its five-year life.

The UTS analysts said the findings showed pharmacists were becoming accustomed to the agreement and were increasingly putting measures in place to utilise services negotiated via the agreement.

In the latest survey, three quarters of respondents reported a neutral rating over their feelings about the 6CPA, on both a professional and economic level.

A higher percentage (16%) stated a satisfied feeling about the agreement on a professional level compared to those (11%) satisfied on an economic level.

However, the proportion satisfied on an economic level had increased from previous surveys, and there was a marginal reduction in those who were dissatisfied.

“There appears to be an emerging sense of confidence in the economic reliability of the 6CPA, however a majority of pharmacists are still waiting to see the full economic benefit,” the UTS analysis concluded.

The same finding was replicated on the professional side, however satisfaction was much higher among owners and managers here than among employed pharmacists, leading former PSA national president Warwick Plunkett to conclude that “owners and man agers are happy obtaining more funding for the older CPA remunerated services while employees remain disappointed that their professional and remuneration opportunities have again been ignored.”

Cameron Ziebell, Commonwealth Bank national head of healthcare, said: “… it is clear to see that owners are seeing the economic uplift through executing and leveraging 6CPA initiatives.”

Commenting on the results, UTS Adjunct Professor John Montgomery said “lower satisfaction with the economics compared with the professional aspects of the 6CPA is not surprising, probably driven by underlying uncertainty as to how professional services will translate financially.”

The Guild’s view

AJP speaks to Guild national president George Tambassis to get the leadership’s view on how the 6CPA is tracking

Q: How would the Guild view the first three years of the 6CPA?

A: The Sixth Community Pharmacy Agreement (6CPA) broke new ground in delivering community pharmacy a floor price (the Administration, Handling and Infrastructure fee), almost doubling of the professional services funding, a pharmacy trial program, and indexation to the consumer price index for dispensing remuneration. Importantly it also renewed the Location Rules, providing certainty and stability for pharmacy owners, and a viable network for the distribution and dispensing of PBS medicines.

The Pharmacy Compact, signed in May 2017 amended 6CPA to deal with a number of mid-Agreement issues that arose. The Compact delivered a $210 million boost in the AHI, and most importantly a commitment to remove the sunset clause in the Location Rules – a commitment delivered by the Government with the passage of legislation in February 2018. This means the Location Rules will not expire in June 2020, as they otherwise would have done.

The Compact also saw the release of significant professional services funding to boost programs such as Dose Administration Aids and Staged Supply.

Q: What are the key priorities for the remainder of the agreement’s life?

A: The Pharmacy Guild has been focussed on implementing 6CPA programs, including medication management and Pharmacy Trial Programs. We are also keen to take forward the review of the $1 discount as well as continuing to work with the Government on implementing our commitments in the Pharmacy Compact. We’re also trying to maximise the uptake and benefits of the My Health Record, and helping to drive the take-up of biosimilars.

Q: Is the Guild happy with the progress of the Pharmacy Trial Program to date?

A: We are pleased that the Diabetes Screening Trial has been completed in the field with the evaluations near completion.  We are pleased that a number of other trials are underway and announced but it is clear that it would be preferable if the PTP overall was more advanced by this stage of the 6CPA.

Q: What is the next step/s with the PTP?

A: There is a need to start and complete the remaining trials expeditiously so that the results can be factored into the 7CPA negotiations and other relevant government processes.  In particular, we are working hard to move forward the Chronic Pain MedsCheck trial which was announced by the Minister earlier this year.

Q: Which of the PTP projects that are still in limbo would the Guild most like to see proceed?

The Post Discharge Medicines Reconciliation Service trial was announced by the former Minister in March 2016 but the trial protocol has not been approved. With the advent of the ‘opt out’ My Health Record, the time is right to take this vital trial forward.  As Minister Hunt recently made clear during the announcement of a similar digital health test bed trial, medicines reconciliation can save lives with 250,000 Australians admitted to hospitals each year due to medicines misadventure.

Q: Are the processes or dialogue in place to ensure this proceeds to pharmacy’s satisfaction?

A: During the early stages of the 6CPA, the Guild expressed concerns about the approval processes for the PTP. Some worthwhile changes were made and the Guild is working with the Department to remove any remaining barriers and address any issues to enable the remaining trials to proceed as quickly as possible.

Q: Has the Administration, Handling & Infrastructure Fee been a success?

A: Yes. The AHI, which is indexed and just passed the $4 mark on 1 July, is a structural reform that has made a significant contribution to pharmacy business stability. In the face of rapidly falling prices across an ever-wider range of PBS medicines, the AHI has prevented the dispensing of some low cost medicines from being rendered uneconomic.

Q: Has the 6CPA, and the PBS reform package, achieved the desired outcomes in terms of PBS spending? What impact has this had on community pharmacy?

A: The 6CPA and the PBS reforms including the additional reforms in the 2017 compacts have been highly successful in ensuring the PBS is fiscally sustainable.  Pharmacy is continuing to cope with PBS subsidised script volumes that are substantially lower than the 6CPA estimates with partial compensation through the increase in the AHI in the Pharmacy Compact.

The Government’s savings from price disclosure and lower PBS volumes are ongoing and the Guild is also working with the Government on the changes to administering PBS medicines with Special Pricing Arrangements.  

It is vital that the sector remains viable and has certainty in terms of future remuneration, and that patients are able to share in the benefits of PBS reforms by ensuring that medicines remain affordable.

Q: Has the $1 PBS co-pay discount had as dramatic an effect on pharmacy viability as was feared at the time? What is the latest measure of its impact/use?

A: The optional dollar discount is a flawed piece of health policy and we have opposed it from the beginning.  It breaches the universality of the PBS – because it means some patients will pay more than other patients for the same subsidised medicine. It also provides no net financial benefit for the sickest and neediest patients who will pay the same total amount in the calendar year for their medicines – but their access to the safety net will be delayed. 

The discount also discriminates against patients in rurall and regional Australia where economic conditions might mean local pharmacies are unable to provide the discount. All in all, a very bad policy, and we continue to explore ways to be rid of it.

Q: Does the Guild believe the reviews incorporated within the 6CPA framework (such as the ‘King’ Review) are now satisfactorily completed? What has been the best and worst outcomes/impacts of the reviews?

A: The Review of Pharmacy Remuneration and Regulation is now water under the bridge. In its response to the Review, released in May this year, the Government expressly ruled out some of the recommendations of the Review, notably the dispensing of medicines by vending machines and a tender system for generic medicines. Other options put forward by the Review were “noted” by the Government.

The Pharmacy Review’s key purpose was to help inform the development of the Seventh Community Pharmacy Agreement ahead of the expiry of the current Agreement. We were pleased that the Government committed in the May 2017 Pharmacy Compact to working with the Guild to ensure that any response to the Review maintains the community pharmacy model and secures a viable pharmacy sector.

Our focus is now on the Community Pharmacy 2025 project – the biggest research project of its kind ever undertaken by the Pharmacy Guild.

Q: Will there be outstanding, unspent money at the expiry of the 6CPA as had happened with some previous agreements?  

A: The Guild is determined to ensure that all 6CPA monies are fully expended to the maximum benefit of patients and is undertaking regular updates and reviews with the Department.

Q: In retrospect, is there something not in the 6CPA that the guild feels it should have argued for? Or something in it they should have argued against?

A: The Guild argued very strongly during the 6CPA for a sustainable supply chain and believes that it is in the interests of pharmacies and patients that the CSO is retained and that there is a wholesale mark up floor, as well as a requirement that all PBS medicines are made available through the full line wholesalers.

Q: Can the 6CPA be judged as a success for community pharmacy?

A: Yes. The 6CPA contained some important reforms that added to viability and certainty for pharmacies in the network. The Community Pharmacy Agreements since 1990 have served the public and the pharmacy sector well.

It is notable that the current Agreement had a significant amendment mid-term with the Pharmacy Compact, reflecting the volatility of the regulatory environment.

We are now focused on the lead up to negotiating a Seventh CPA and we will be leaving no stone unturned to ensure that future agreement adds benefit for patients and for the sustainability of community pharmacy businesses.


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