‘Fundamental’ misunderstanding of location rules’ purpose

Critics of the location rules just don’t understand them, says the Guild’s executive director

In this week’s edition of Forefront, David Quilty writes that the Guild welcomed the passage through Federal Parliament last week of amendments to remove the Pharmacy Location Rules sunset clause.

This was a “timely reminder of the importance of maintaining the tried and trusted community pharmacy model,” he wrote.

“The small number of commentators who almost obsessively rail against the Location Rules fundamentally misunderstand their purpose as well as the fact that the PBS is a monopsony market where the Government as the sole funder quite validly seeks to ensure that its public policy objectives are achieved in a way that is both efficient and delivers quality health outcomes.”

The rules work for the Government, pharmacies and patients, he says.

“It is sometimes argued by opponents of the Location Rules that they are restrictive and anti-competitive because they prevent any pharmacist from opening up a pharmacy in any location,” Mr Quilty writes.

“This misunderstands their public policy purpose and ignores the international experience when such rules either don’t exist or are dismantled.

“The purpose of the Location Rules is to ensure that all Australians, regardless of where they live, have timely and equitable access to the PBS delivered through an efficiently distributed network of viable community pharmacies.”

Mr Quilty says the Location Rules encourage pharmacies to operate in areas of unmet or increased public need, such as rural and regional locations and outer metropolitan suburbs, as well as reducing over-concentration in areas that already have good pharmacy access.

“In comparable countries where pharmacy location regulations either do not exist or have been dismantled, there is demonstrated tendency for pharmacies to over-concentrate in inner city and higher socio-economic locations while less commercially favourable locations remain under-served.

“The United Kingdom is a good example where the relaxation of pharmacy location rules has led to an inefficient over-concentration of large numbers of pharmacies in preferred locations, with policymakers regretting the change and contemplating rectifying actions to ensure the sustainability of the network.”

The Australian rules avoid this while still allowing the number of overall pharmacies to grow alongside the population, he writes.

This, alongside the Ministerial Discretion available in cases where opening a pharmacy is deemed to be in the public interest despite the Rules otherwise prohibiting its opening, allows for appropriate access for patients, he says.

“For nearly 30 years, the Location Rules have been a proven success in ensuring that all Australians have equitable and timely access to the PBS which is not only consistently recognised as the world’s best subsidised medicines model but is also the most fiscally sustainable part of Australia’s health system.

“The fact that the Federal Parliament last week overwhelmingly acknowledged this success story by legislating the continuation of the Location Rules on an ongoing basis is an important health reform that will provide an increased level of certainty to enable Australia’s 5,700 community pharmacies to continue investing in delivering the best possible medicines supply and support and broader health outcomes for their patients.”

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