Another inquiry suggests deregulation


The Government should “reconsider its commitment to the Pharmacy Rules,” a Senate inquiry into red tape has found

The Select Committee on Red Tape has handed down an interim report in which it makes six recommendations, including the investigation of options “to enhance competition in the delivery of pharmaceuticals listed on the Pharmaceutical Benefits Scheme, with priority given to consumers rather than pharmacy owners”.

Another recommendation is that through the Council of Australian Governments, the Federal Government should review the ownership rules and “whether they serve the interests of the public rather than established owners”.

The interim report identifies the pharmacy rules as “the area of most concern” in submissions, with stakeholders such as the Grattan Institute and Rhodes Management suggesting that the rules limit the number of pharmacies and where they can operate.

The Guild’s submission highlighted that the current model enjoys significant community support while the PSA’s Shane Jackson had indicated to the Committee when questioned that the effect of the Pharmacy Rules is definitely an issue for some PSA members.

However, Dr Jackson told the AJP that “yes, some of our members have cited that location rules have been a barrier”.

But “the PSA supports the concept of location rules,” he says.

The interim report noted that the Pharmacy Rules are intended to support consumer access to medicines, but “the argument that this is aided by placing limits on the location of pharmacies is difficult to sustain”.

“Clearly, it is of considerable benefit to existing pharmacies and makes the establishment of new pharmacies quite difficult.

“The committee understands that, despite multiple reviews favouring change, the Australian Government has chosen to disregard calls for more competitive and consumer-oriented arrangements.

“Information presented to the committee reinforces these calls for reconsideration of the Pharmacy Rules to ensure they remain fit for purpose.”

The interim report says the Committee “questions whether limits on the number of pharmacies that may be owned by an individual pharmacist or company are in the public interest”.

“The Committee understands that this is exceptional regulation in that there are no such limits for comparative professions (such as veterinary and dental practices),” it says.

It also recommended the investigation and consideration of options for progressing uniform medicines legislation.

The Committee also recommended that the Government investigate options to align the payment of GST with business practices, due to the cash flow impact the tax has on small business.

“The Committee heard that pharmacists are diverted from their core duties due to intervening red tape issues, many of which are within the purview of the Australian Government.

“The Committee considers that it would be beneficial to relieve this pressure, commencing with a focus on GST issues.”

And the Committee found that community pharmacies should not be exposed to costs attributable to wholesalers which are passing on costs arising from Government-imposed obligations.

It also recommended that the Government investigate the extent to which pharmacies are exposed to “unnecessary costs” as a result of Government policy on pharmaceutical benefits supply.

It recommended that the Government develop a centralised electronic system for the PBS Safety Net, and consider the proposal for two new digital portals to track the prescribing and dispensing of medicines as well as trading, tracking and supplying them on the PBS and RPBS.

A spokesperson for the Pharmacy Guild told the AJP that “there are some suggestions worth taking a look at in the report, but not in relation to Location Rules”. 

“The Guild welcomes the bi-partisan support shown last week for the removal of the sunset clause in the Location Rules, ensuring that the rules continue to benefit consumers through the maintenance of a viable national pharmacy network.”

Access the interim report here.

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7 Comments

  1. Amandarose
    21/02/2018

    I agree that the location rules are not the best. It protects mediocre businesses in regional areas. I think it is reasonable to keep ownership in pharmacists hands and limit the number owned but location rules allow useless pharmacists a monopoly.

  2. PharmOwner
    21/02/2018

    It’s interesting that “The Committee understands that this is exceptional regulation in that there are no such limits for comparative professions (such as veterinary and dental practices),” I’ve heard of some eye-watering charges to patients availing themselves of dental and veterinary services (that I would love to be able to charge, but the amount of competition and PBS regulations prevents me from doing so). Dental and vet practices are also more service-based professions rather than retailers.

    • geoff
      21/02/2018

      I haven’t read the report yet but could not agree more that it is a poor comparison in that open location rules for dentists and vets has not lead to cheaper prices, has not been demonstrated to provide equitable access throughout regional Australia. The other failing in the comparison is that they are not paid from public purse and regulated entirely in how they practise as pharmacy is.
      The aim of the location rules was never to directly provide benefits to the public but only ever to reduce the cost of the PBS to the Govt; it has had the side effect of providing great access as new entrants need to service greenfield sites rather than clustering in well serviced hotspots- as evidenced when Norway’s change of rules resulted in clustering.

  3. John Smith
    21/02/2018

    Very good recommendations. However, I think it would be reasonable to keep the ownership rules, but with more restrictions to limit the monopoly that currently exists. Opening the market is definitely for the benefit of the customers.

    It was interesting when Dr Jackson mentioned PSA has not consulted its members re location rules, but PSA supports the location rules. This is such a conflict of interest, considering the PSA is the peak body for all pharmacists, but still don’t consult with members.

  4. GlassCeiling
    21/02/2018

    Location rules are the reason pharmacy has not advanced as an industry . The Guild will sacrifice every pharmacy initiative that does not line an owners pocket in order to maintain protectionist rules that prevent true competition and pharmacist innovation. Greed is the driving ideology .
    Pharmacies should be owned by pharmacists and the location rules should be abolished.
    Absentee multimillionaire owners are everywhere owning five pharmacies and more through various arrangements while employee pharmacists subside on meagre wages.
    The location rules have given pharmacies to developers ( shopping centre approvals) to doctors that own pseudo large medical centres which magically are no longer large the day after approval ( medical centre approvals) and also to wealthy and powerful pharmacists with developer and medical centre contacts. Developers and doctors determine who can own a pharmacy and the terms of that ownership ( rent and lease term).
    Owner pharmacists have no real control over the future of their own business unless they own their own building. Failure to obtain a new lease can spell the end of an approval in certain locations.
    The rules are overdue for change on a mass scale.
    Fair warning for those willing to pay large sums for pharmacies – the rules are on their way out sooner than later .

    • Amanda R
      22/02/2018

      As an owner that was lucky to sell at the right time, I agree. There are many of these egoistic, fat cats making squillions out of unappreciated pharmacy managers and puppet owners. All whilst they sit in their offices (or golf buggies) pretending they are working. They have certain contacts in the industry that let them know of the best opportunities (ie pharmacies to buy) for easy capital gains. All they need is someone to run it on a low wage (<$40/hr ideally).
      Note that well-run pharmacies can easily pay their managers well in excess of $40/hr. Owners just don't want you to know that!
      Deals are done behind closed doors. It's how the pharmacy industry works much like many less regulated industries. Been there, done that. I was one of the lucky ones. Made enough to set myself up for life a few years after graduating. Would have made less if the rules had changed and affected cap. rates. But as I said VERY LUCKY. Hard work pays off.
      BUT if I am honest, yes, pharmacies do get it easy. My advice: don't overpay for your business and seek low operational costs. Discounters can easy achieve 15%+ NET profit. Even if the rules change you will be fine.

  5. Shahriar Kashani-Malaki
    23/02/2018

    These two passages would make me question the motives of those involved in the inquiry.

    1. Options “to enhance competition in the delivery of pharmaceuticals listed on the Pharmaceutical Benefits Scheme, with priority given to consumers rather than pharmacy owners”.

    2.The interim report says the Committee “questions whether limits on the number of pharmacies that may be owned by an individual pharmacist or company are in the public interest”.

    If I save my pennies so I can buy all the Pharmacies, eventually I’ll get to charge whatever I like, as Bunnings Warehouse does. You won’t find a cheaper price anywhere else if no one else exists or sells the same product.

    Some would call this my ‘Freedom’. It’s the consumers choice whether they buy or don’t buy pharmaceuticals so perhaps the market would sort this out. I have read a lot of this ridiculous logic lately.

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