The CPA is “world leading”, say experts – but its co-payments and safety net are relatively expensive
Expert economists in the pharmacy sector have pointed out that community pharmacies have a good thing going with the Community Pharmacy Agreement – particularly the 7CPA.
National, negotiated funding agreements between Federal governments and the community pharmacy sector are the exception rather than the rule, said Stephen Armstrong, Chief Economist of the World Pharmacy Council at APP2021.
Even those countries that do have national funding agreements don’t have the same guarantees.
For example, New Zealand has an “evergreen” agreement that is reviewed or amended each year, said Mr Armstrong. In this scenario, pharmacies sign individual contracts.
Meanwhile in England, the community pharmacy network signs a five-year deal, however some of these elements require renegotiation each year.
There are “many benefits” of Australia’s CPA versus other agreements, said Mr Armstrong, who is also an economic advisor to the Pharmacy Guild of Australia.
For example, it provides five years of relative certainty, annual indexation, specific rural and regional funding arrangements, and national programs and services funding.
“Our is more comprehensive than any of those other agreements,” he said.
Additionally, in the 7CPA, the Pharmacy Guild was able to negotiate a remuneration adjustment mechanism.
“This time around it’s far clearer [than the former risk-share arrangement], there is a guaranteed floor for dispensing remuneration for delivering subsidised medicines … it’s really a first,” said Anthony Tassone, the Pharmacy Guild’s Chair of Health Economics & Policy Committee, at the APP conference’s 7CPA session.
Philip Chindamo, Group Executive Health Economics at the Pharmacy Guild of Australia, explained further that, “should remuneration fall below that floor, and depending what happens to below co-payment scripts, there would be an adjustment upwards in the AHI to bring the network back to the agreed remuneration”.
He explained that there is a ceiling to the mechanism that allows for growth up to 5% year on year before any adjustment mechanism would be triggered.
There are four assessment periods during the 7CPA where the Commonwealth and the Guild will compare what scripts have been against the agreed totals, and see whether that triggers the remuneration adjustment mechanism, said Mr Chindamo.
In the first six months ending December 2020, the variation was 3.39% so there was no trigger to the mechanism and the community pharmacy network got “to keep that growth”, he explained.
“If it was above 5% and depending on what happens to below copayment scripts, there would be adjustment. If it was below 0%, there would be an adjustment in the AHI. Hopefully this provides confidence to the network and certainty that wasn’t available in previous CPAs.”
Mr Tassone said the Agreement, including this new mechanism, gives “security to our sector”.
Other countries have no such certainty from a volume-based adjustment mechanism written into their Agreements, although a few countries are able to negotiate support.
New Zealand community pharmacies may receive an undefined “contribution to cost pressure” explained Mr Armstrong, and in England community pharmacies can renegotiate for an adjustment.
However Mr Armstrong noted that the situation isn’t quite so sunny for consumers in Australia.
The concessional co-payment for medicines is quite high, he said. And for people with two or more chronic conditions, Australia’s affordability is worse than other countries.
In Australia there is a co-payment of up to $41.30 for most PBS medicines or $6.60 if you have a concession card. The safety net is $1497.20 for general patients and $316.80 for concessional patients.
By comparison, Scotland, Wales and Northern Ireland provide prescriptions medicines free of charge.
In England, about 90% of items are free, with a maximum charge of £9.15 (AU$16.73).
Meanwhile in New Zealand, there is a NZ$5 (AU$4.66) maximum co-payment, with a safety net of NZ$100 (AU$93.13) per year for all patients.
And in France, consumers pay €0.50 (AU$0.79) per item, with a maximum of €50 (AU$78.81) per year for all patients.
“This pharmacy agreement is unique, comprehensive and world leading, but unfortunately Australia’s co-payments and safety net are very expensive compared to many other countries,” said Mr Armstrong.
However he added that the Australian system is “pretty close to ideal” for community pharmacies, with its location rules coupled with pharmacy ownership restrictions.