A “fundamental conflict of interest” involving Chemist Warehouse has compromised the independence of the Pharmacy Remuneration and Regulation Review, the Pharmacy Guild says.
It plans to pursue a Freedom of Information (FOI) request to hold the Review accountable.
Another conflict of interest involves Professor Ian Harper, the lead author of the 2014 Competition Policy Review, it says.
In a message to members last week, Guild president George Tambassis warned that the Guild does not have a level of confidence that would allow it to support members participating in the King Review’s investigation into pharmacy sector finances.
“The Guild has been made aware that an economic consultancy has been contracted by the Review for the purposes of preparing an international literature review of pharmacy,” Tambassis wrote to Guild members.
“The Guild is also aware, and in fact it is public knowledge, that the same consultancy was engaged by Chemist Warehouse to produce a report which forms part of its submission to the Review.
“The purpose of the consultancy report was to argue Chemist Warehouse’s case to the Review, particularly in relation to the regulation of pharmacy, including Location Rules.
“There is an inherent and obvious conflict of interest when the Review engages a consultancy to assist the Review and that same consultancy is contributing to a major submission to the Review.”
The communication was followed by a message from the King Review Panel reassuring on the confidentiality of the Review process. The Review also listed the consultants working for it, including Deloitte.
Tambassis wrote again to members on the weekend, promising that the Guild is “determined to get to the bottom of the matter”.
“In the Guild’s view, there is a fundamental conflict of interest having one organisation working for the Review and participating in submissions to the Review,” he writes.
“This conflict seriously undermines the independence of the Review and makes it virtually impossible for it to make untainted recommendations, particularly in regard to location rules.
“It is of great concern that the Panel’s message yesterday makes no mention of this obvious conflict of interest and how it is being handled.
“In the interests of transparency, it is imperative that all documentation relating to the Review’s interactions with Deloitte is made public as soon as possible. The Guild will be pursuing a Freedom of Information (FOI) request to hold the Review accountable.”
Tambassis wrote in the first message to members that the Guild was told the Review Panel were unaware of the issue until the consultancy was already engaged, and the Chemist Warehouse submission lodged, with the analysis from the same consultancy attached to it.
However, “this does not reduce the seriousness of the conflict of interest in any way”, he says.
“There appears to have been a serious breakdown in the Review’s due diligence in the engagement of this consultancy and a failure to be transparent and take rectifying action once the conflict of interest became known last September.”
A link between the consultancy and Professor Ian Harper should also have rung alarm bells, he says, “particularly as the Panel Chair Professor Stephen King had co-authored an opinion piece in a national newspaper in reaction to the Competition Policy Review in which he stated that the Location Rules should be removed.
“The consultancy report for the Chemist Warehouse submission was prepared by a panel of economists including Professor Ian Harper,” Tambassis writes.
“The fact the Review published this major submission containing a report from the same consultancy that the Review itself had already engaged to provide a major literature review, and then took no rectifying action, is doubly problematic.”
The conflict of interest, as well as the failure to declare and address it in a timely manner, severely compromise the Review’s independence, Tambassis writes.
He expressed concern about the Review’s having sought pharmacy data from sources such as major banks and government agencies, particularly given this “has been happening covertly without the knowledge of community pharmacy owners”.
The Guild will pursue an FOI request to understand what data has been sought from the ATO and what has been provided.
Tambassis also highlighted that Guild senior economists met with the Review Secretariat and later advised the Guild that the financial survey has “significant defects”.
These render it incapable of providing an accurate picture of pharmacy operations, and providing robust information to inform the Panel’s recommendations on a timely basis.
“Given these inherent flaws, we cannot endorse the survey or recommend that you answer it.”