5CPA handling could’ve been better: audit


The national audit of the administration of the Fifth Community Pharmacy has found key areas for improvement: the clarity of the 5CPA and related public reporting; record-keeping; the application of financial framework requirements; risk management; and seeking ministerial approvals.

The Australian National Audit Office report tabled in Parliament in particular found that:

  • The 5CPA does not clearly document expected net savings under the agreement, and there is no straightforward means for the Parliament and other stakeholders to be informed of the expected or actual cost of key 5CPA components. Specifically, the agreement does not document that some $2.2bn of the $13.8bn that the Commonwealth ‘will deliver’ for pharmacy remuneration is sourced from patient co‑payments, which are not a cost to government. Similarly, the department’s annual report aggregates the cost of pharmacy remuneration (expenditure on services) with the cost of PBS medicines (expenditure on products), without differentiating between the two types of expenditure.
  • There were persistent shortcomings in departmental record-keeping relating to the 5CPA. The Department of Health did not keep a formal record of its meetings with the Pharmacy Guild during the 5CPA negotiations, and did not document its subsequent discussions with the Guild on the negotiation of related contracts. Given the significance of the issues under negotiation, the decision not to prepare an official record of discussions was not consistent with sound practice, as shortcomings in record-keeping can affect a government entity’s capacity to discharge advisory, accountability and contract management obligations.
  • The department did not assess whether financial framework requirements would apply to Pharmacy Guild officials when making payments of public money pursuant to the administration of 5CPA professional programs, resulting in a risk of non-compliance with legislative requirements. In designing and implementing complex administrative arrangements, it is important to consider relevant resource management requirements at the design stage, so as to avoid potential compliance and reputational risks.
  • The 5CPA provides flexibility to re-allocate money between the various professional programs funded under the agreement, subject to ministerial approval. However, at times the department has re-allocated funds without prior ministerial approval, including to a $5.8m communication strategy to be delivered by the Pharmacy Guild. The communication strategy is not a professional program, but was nonetheless funded mainly from professional program allocations.
  • Further, Department of Health did not secure ministerial approval before re-allocating $7.3m of funding originally approved by ministers as a component of pharmacy remuneration—the Electronic Prescription Fee (EPF)—to other purposes, including financial assistance paid to Prescription Exchange Services and $896,110 to the Pharmacy Guild to increase pharmacies’ understanding, awareness and uptake of EPF. As a consequence, in the first three years of the 5CPA some 80% of EPF payments were not paid to pharmacies but were instead used to fund other activities. While the Department of Health advised the ANAO that discussions were held with the minister’s office, documented evidence to support this was not available.

The Pharmacy Guild says it considers that the audit has provided an important opportunity to scrutinize the administration of the 5CPA and will continue to work constructively with the Commonwealth and all stakeholders in ensuring that the next agreement provides maximum benefit to community pharmacy, the pharmacist profession, taxpayers, and, most importantly, the Australian public which relies on these vital PBS medicines and health care services.

The Guild welcomes the fact that the 5CPA audit does not make any adverse findings in relation to its role in the administration of the 5CPA. The Guild says it has fulfilled its contractual requirements in relation to the 5CPA and met all the KPIs set by the Department of Health when it agreed to take full responsibility from 1 March last year for processing and paying claims for services performed under the 5CPA professional programs.

The ANAO has made a number of recommendations for improvement which were accepted by the Department of Health.




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