‘If the government wants to reduce red tape, remove the CPA.’

An industry analyst has called for the scrapping of Community Pharmacy Agreements and the CSO in a bid to rid the sector of “red tape”

Rhodes Management, led by business consultant Michael Rhodes, courted controversy earlier this year with an article and report calling for deregulation as well as a similar submission to the King Review.

Alongside pharmacy groups including the Guild and PSA, Rhodes Management has now also made a submission to the Senate Inquiry looking into how red tape affects the pharmacy sector.

Doctors should be allowed to practice in pharmacies and some medical centres should be allowed to sell PBS medicines, the submission states.

It takes aim at both the Pharmacy Guild and PSA, suggesting many see the latter as a “stooge” of the former, as well as the CSO, and asserts that much of the red tape around pharmacy is of the making of these stakeholders.

The new submission reprises comments made in the earlier reports, including that the CPA is a “26-year-old dinosaur of market inefficiency”.

“We have called the CPA a PORPA – or Pharmacy Ownership Restriction and Penetration Agreement,” the new submission states, claiming that CPAs are “neither patient centric or government (value) centric”.

“Increasingly the PGA lobby the government to extract more money for services, which are provided by employee pharmacists,” says the Rhodes submission.

“The problem being there is typically a daily two-hour time deficit to actually provide these services, based on 150 scripts per day.

“The problem is most urban pharmacies do 200-300 scripts per day. In simple terms the extracted money represents pure profit for owners who don’t actually provide the service.

“Current locations as they stand only have a 30% loyalty factor attached to them. So, despite what the PGA says 70% of customers value relationships and price well above pharmacy location loyalty.

“What we have here are burdensome rules that restrict competition, ownership, restrict supply, restrict locations and only benefit pharmacy owners whom by and large are not even working in their pharmacies anyway.

“It is simply inefficient to constrict or temper supply and demand under the auspices of location and ownership rules only to protect a few privileged owners, at the expense of the most vulnerable in society which are the elderly patients over 65 whom comprise over 80% of business volume for most pharmacies.

“If the government wants to reduce red tape, remove the CPA and replace it with a patient centric charter for the supply of medicines and for the access to medicines.”

The submission claims that “by and large employee pharmacists do not see the PSA as the peak body and many see them as a stooge of the PGA”.

“Too often under the auspices of ‘services’ advocated for government reimbursement by the PGA, which in many cases simply cannot be provided the employee pharmacists anyway, these services then require some form of ‘accreditation’, which must be provided by the PSA at some cost to the pharmacist.

“The PSA are a registered training organisation (RTO) and their collusion with the PGA is palpable and opaque.

“If the government want to reduce red tape it must ensure that graduating pharmacists from university are trained in ALL AREAS of pharmacy including vaccines and inoculations, home medicines reviews, and all current services provided by pharmacists and ensure that if accreditation is required for certain additional new services then this be opened up to universities nationally whom provide pharmaceutical training as well as the PSA.

“The PSA should not have a monopoly on training and accrediting pharmacists for current or future services.”

Shane Jackson, national president of the PSA, says that this part of the Rhodes submission “shows a lack of understanding and insight,” pointing out that PSA has no such monopoly.

“There’s absolutely accreditation requirements which are run independently by the Association of Consultant Pharmacists or the Society of Hospital Pharmacists of Australia for medications reviews, but they’re credentials required to make sure individuals can conduct those appropriately.

“Suggesting that there are restrictions on that is patently false – and that’s a submission that’s gone to a Senate Inquiry that’s erroneous, so that’s an issue for Mr Rhodes.”

The submission also targets the CSO as a “$200M waste of money that funds inefficiency in the wholesaler supply chain under the auspices of guaranteeing supply mainly to remote or regional pharmacies”.

Manufacturers can negotiate parcel supply services that are more competitive and efficient than the third party wholesalers, the submission claims; it also says vertical integration means prices have remained inflated.

“If the government wants to reduce red tape, remove the CSO and divert the funds to innovation which a) tracks the supply chain demand and supply of all PBS medicines and b) ensures digitisation of the consultation to collection process within the industry,” says the submission.

“This diversion of funds should be done under the auspices of a patient centric charter for supply and access to medicines.”

Another area targeted is the way former hospital patients are managed and treated regarding medical visits and medicines.

“Too often patients are discharged from hospital without any reference to the medicines they need, the medicines they’ve been prescribed or the medicines they’ve taken.

“No reference exists between in hospital medical consultations and out of hospital medical consultations and too often pharmacists are left deciphering what is best for the patient and in turn recommending what the patient must do.

“This deciphering results in phone calls, follow-ups, questioning and delays to the care or management of the patient. If the government want to reduce red tape it must offer a portal that tracks all patient medicine management.”

The submission again calls for the introduction of two new concepts to replace the CPA agreement: VABESMA – The Value Based Efficient Supply of Medicines in Australia, and VABEAMA – The Value Based Efficient Access of Medicines in Australia.

It also calls for digitisation of the consultation to collection (of prescription drugs) process integrated with a pharmacy supply chain portal which would address shortage issues and related administration; and aggregation of systems, information and processes within the sector.

The Guild has also been contacted for comment.

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  1. Willy the chemist

    Rhodes Management is just another stooge for the BIG BUSINESS. They all beat to the tune of “reducing red tapes”, a synonym for deregulation and privatisation.

    A good number of years ago, a Prof S King sagely proclaimed that deregulation of electricity retailers will create efficient competitions and lowered electricity prices. In fact he proclaimed the same with gas, telephony, healthcare etc.
    We all know what happens when industries are privatised & deregulated without proper governmental oversight?

    Since we are discussing the efficiency and outcomes of healthcare fundings, we must not ignore one of the key measures of health outcomes…..life expectancy. On this measure Australia perform well comparable to most OECD countries whereas USA perform badly. Notwithstanding this, US now has a high public healthcare expenditure as % GDP. It is just that the US also has a high private healthcare expenditure as % GDP.
    In effect, it has a lose-lose-lose situation of lowest outcome, high government spending, and high private spending.

    The Community Pharmacy Agreements and CSO is principally public healthcare. What Rhodes Management seems to be saying is dismantling a public healthcare system and replacing with private healthcare. “…achieving universal (healthcare) coverage requires government or publicly mandated finance.”*

    Australia spent $162 billion in 2014-15 total health or 2.8% increase over 2013-14. This was followed by 4.6% av. increase in the 10 year.
    Health expenditure per person at 1.4% increase in 2014-15 vs 2.9% over the past 10 years.
    Health spending at 10% of GDP increase from 8.8% in 2004-05.

    Successive intergenerational report have revised down projections. In 2014, the National Commission of Audit revised projections downwards once again, to remain STATIC at 0.6% to 2023-24.

    If anything, it is time to re-invest into pharmacy.

    /Users/WilsonTan/Dropbox/WTPS Shared Files/IGRs & NCOA PBS Expenditure forecast.png
    /Users/WilsonTan/Dropbox/WTPS Shared Files/Life expectancy vs health expenditure .png
    /Users/WilsonTan/Dropbox/WTPS Shared Files/Public healthcare expenditure.png
    /Users/WilsonTan/Dropbox/WTPS Shared Files/US Healthcare chart.png
    /Users/WilsonTan/Dropbox/WTPS Shared Files/Distribution of healthcare expenditure in US.png

    *(source: Our World in Data.
    https://www.aihw.gov.au/reports/health-welfare-expenditure/health-expenditure-australia-2014-15/contents/table-of-contents )

  2. Nicholas Logan

    I’m glad Michael Rhodes is described as an industry analyst rather than an industry expert. His determination to drum up some business might be reflective of a downturn in activity for consulting firms whose expertise is making inflammatory statements without any insight.

  3. Anne Todd

    I read all the submissions and this one stood out as a convoluted unimpressive take on reducing red tape. The dismantling of the supply chain and replacement he moots seems more complex, unwieldy and unlikely to suit anyone other than big pharma chains and certainly not rural or regional Australian health consumers.

  4. Peter Allen

    The elephant tusk in the public health room is the lack of dentistry affordable to all. My dentist says “And we’ll fight tooth and nail to keep the government’s hands off our very lucrative profession.”
    That is an election saver for the Libs to show that they care and share. They got sucked into the fiscal vortex of the Disability scheme, this will cost relative peanuts.

    # ‘”Tooth and nail” — count us in favour of a subsidised scheme”; the chiropodists.

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