Location rules dispute continues


Health Minister and 24-hr pharmacy owner to pay $64,000 in costs over Federal Court decision – but the pharmacy could still go ahead

In January this year the owner of two Melbourne pharmacies had his case upheld in Federal Court against the Health Minister and another pharmacy owner over the approval of a 24-hour pharmacy attached to a medical centre.

The Federal Court had ruled the Minister for Health failed to “consider” the objections of Melbourne pharmacy owner Dominic Stambe before approving a new pharmacy to be opened nearby.

In his submission to the Minister, Mr Stambe objected to the proposal of a 24-hour pharmacy attached to a large medical centre in south-east Melbourne, which would be considerably less than 500 metres from his two pharmacies.

He argued that the proposed pharmacy was only approximately 136 metres and 239 metres respectively from his two pharmacies.

While the application for the new pharmacy was initially rejected, the Health Minister exercised his discretionary power to approve it in November 2017, saying it was in the public interest.

The pharmacy began trading in March 2018.

Justice Debra Mortimer was satisfied that at the time of the exercise of power, the Minister had neither read nor “considered” the objections Mr Stambe had provided.

In a follow-up decision this month, Justice Mortimer found that while the Minister’s decision in November 2017 was “an unlawful exercise of power” and should be set aside, there was still a further decision to be made on the status of the 24-hour pharmacy.

“The power has been exercised, and an approval granted: it is one which is in force, being acted upon every day, and entitling members of the public to receive pharmaceutical benefits dispensed by the second respondent,” she said.

“If the Minister’s decision is affected by error, so that the approval should not stand because of that error (both of which are findings the Court has already made), then before there can be a further exercise of power, the current approval must be set aside. It must be deprived of its effect. The Court must send the question of the exercise of power back to the Minister for reconsideration, according to law.”

Taking into account potential financial impact on the owner of the 24-hour pharmacy and any impacts on the patients of the medical centre – should the pharmacy be forced to close – Justice Mortimer decided that the order to set aside the approval take effect in two months from now (June 2019).

This would give the 24-hour pharmacy owner and the medical centre “an opportunity to prepare for a possible temporary closure of the pharmacy … while its request for approval is reconsidered”.

The Minister will be given an opportunity to reconsider the pharmacy application from the June date, with Mr Stambe to have the opportunity to provide comments on, or information or documents relevant to, the application before the Health Minister makes a decision.

Regarding costs from the original decision, the Minister for Health agreed to pay Mr Stambe’s costs of $35,093.33 and the owner of the 24-hour pharmacy will pay $28,906.67, a total of $64,000.

Meanwhile Mr Stambe signalled his intention to open one of his pharmacies to trade 24-hours, seven days a week in order to service the patients of the medical centre  – but only if the disputed pharmacy were to lose its approval.

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8 Comments

  1. Youhana Younan
    16/04/2019

    i hope that $35,093.33 comes out of the Minister not from the Health department money , the process of ministerial intervention is very inconsistent and different Ministers can have different opinion , the health minister can approve a pharmacy if that’s in the benefit of the public , of course any pharmacy would be in the benefit of the public .Very any competitive rules are meant to protect the interest of the big pharmacy groups and the big banks

    • M M
      16/04/2019

      I agree with you. More pharmacies mean better accessability to medicines and pharmacy services. It is not rocket science.

      The government turns a blind eye on the benefits of removing location rules.

      The current location rules support monopoly.

      The whole PBS and pharmacy systems needs an immediate attention .

      • Anthony Tassone
        16/04/2019

        M M

        In a post implementation review of the pharmacy location rules (to extend them to 2015) by the Department of Health, there were conclusions that dispute your opinion.

        The post implementation review report (published in 2014) can be found via the below link:

        https://ris.pmc.gov.au/sites/default/files/posts/2014/11/02_accessible-final_20141128.pdf

        Some excerpts of interest in the ‘Conclusions’ section (which starts from Page 29) are below:

        “The pharmacy network, left to market forces alone up to 1990, did not deliver reasonable access to PBS medicines for all Australians. At that time, the Government decided that some form of regulatory intervention in the market was necessary to ensure that PBS medicines were efficiently and equitably available to all Australians. This policy objective was realised through the Rules.”

        In this statement alone – it demonstrates the need for the introduction of the rules to address an issue of inequity of access to PBS medicines which is one of the pillars of national medicines policy (NMP).

        The conclusion then goes on to point out potential barriers to entry by the pharmacy location rules being in place but then concludes;

        “Regardless of these impacts, there is certainly evidence to suggest that the retention of the Rules will maintain the reasonably well-distributed geographical spread of pharmacies in Australia. The Rules ensure that an accessible and commercially viable network of pharmacies exists throughout Australia, including (and especially) in rural and remote areas, while also ensuring there is increasing competition between pharmacies in the market place. These factors are important to achieving the objectives of the Fifth Agreement, NMP and PBS more broadly. ”

        And then further:

        “In addition, if the Rules were abolished altogether, an alternative approach to ensure appropriate community access to PBS medicines would be required. While other methods are available to Government to achieve the objective of an appropriate geographical distribution of pharmacies supplying PBS medicines, the specific outcomes of adopting such other methods are unclear and may be more costly and administratively complex than the current system.

        On this basis, it is the conclusion of this PIR that, while there remains a net benefit to consumers and pharmacy owners from the retention of the Rules from the Fourth Agreement, additional benefits can be achieved. These benefits, particularly in relation to consumers and in the government administration of the Rules, could be realised through the targeted easing of the Rules along the lines of those outlined in Option 1 above.”

        I encourage you to read this document to help better inform your views that you seem to repeat on various online forums without regard to the evidence that supports the retention of pharmacy location rules.

        Anthony Tassone
        President, Pharmacy Guild of Australia (Victoria Branch)

        • Still a Pharmacist
          16/04/2019

          I think the propaganda that location rules are helping rural Australians in terms of medication accessibility is purely untrue.

          If Rural Pharmacy Maintenance Allowance (RPMA) is stopped and current location rules are kept in place, a big number of rural pharmacies will close down their business.

          Conversely, if the location rules are abolished but RPMA is increased to a minimum of 100% of the standard wages of the working pharmacist, many new pharmacies will open in rural Australia.

          Many people believes that long time owners of the pharmacies in Australia have made enough money to create influence on the both sides of the politics. As a businessman, they want their banner group to conquer the scripts from small local pharmacies. But when it is done by a banner with red-blue-yellow logo, they did not like it and engineered the modification of this location rules.

          Now because of this location rules, the price of the pharmacy has been so inflated that in city like Sydney, it is very hard for the 8-9 years’ experienced pharmacists to buy a pharmacy. So naturally we are observing an exodus of good pharmacists. I remember one pharmacist with very stressful work environment told me that in any other industry, he could easily earn $120K+/yr after 10 years, which was impossible in pharmacy.

          It seems that nobody cares about this exodus of pharmacists. Everybody is happy to leave this industry in the hands of less bright pharmacists. Nobody is addressing the very basic question: why a bright young wo/man will work under a shop owner where there is no career future and the alternative is more attractive in terms of work environment and wages?

          Only alternative for them was the possible future ownership (no boss, setting own standard and helping people) and that alternative is long gone! Long live location rules.

          • TALL POPPY
            17/04/2019

            Location rules need to be softened or abolished altogether to allow a new generation of pharmacists to own. Together with stricter limits on numbers of pharmacies owned. Plus proxy-ownership (whereby individuals are able to own/draw profits from more than their maximum state sites via a proxy) needs to be investigated. Each pharmacy site needs to be scrutenized for this thoroughly.
            The current location rules are artifically propping up over-inflated values of pharmacies & making it impossible to enter the market for many ordinary pharmacists.
            Furthermore, it is impossible for competition to open up in many coastal areas of Australia. Especially on areas of the Eastern QLD coast where I’ve had reports that only ONE or TWO pharmacy groups dominate often owned by the same individuals in a partnership arrangement. I can name these areas but all you need to do is go to Google Maps and type in ‘Pharmacy’. Then dig deeper…. In my research, they are able to set their prices much higher than average soley due to the lack of nearby competition. Local populations are crying out for competition.
            **Any new greenfield sites are taken by those in the know with significant contacts in the relevant industries – again excluding ordinary pharmacists from a chance at ownership.
            **Any decent pharmacies that come on the market are immediately offered to the big boys in the industry FIRST. Again compounding the above.
            **The big boys in the industry are only interested in having a source of young, guillible pharmacists to make into puppet-owners (junior partners) to further their efforts in lining their own pockets via clever RETAILING. Pharmacy practice is secondary unless it generates significant profit via a new scheme. Just like Brexit & UK politics there is a large disconnect between ordinary pharmacists and those that control them.
            Anyone that argues against these facts has their own protectionist agendas.
            Many young, exceptionally capable pharmacists that I speak to are either in the process of leaving or considering leaving the pharmacy profession. What career progression is on offer? Can anyone offer a solution that is actually decent?

  2. Still a Pharmacist
    17/04/2019

    Hi Tall Poppy, about two years back when I noticed good pharmacists are leaving the industry, I asked one senior pharmacist to talk to Guild about exemption in location rules for young pharmacists so that they could open their own pharmacy and stayed in the industry.

    My proposal was whatever the location rule said, any pharmacist with 5+ years’ experience should be allowed to open an Owner Operated Pharmacy. PBS approval for this pharmacy should be given to a person and NOT to any partnership or body corporate. Owner must work there at least 80% hours of the business days excluding weekends and entitled leave days. This pharmacy can never be owned by any partner or body corporate but can be sold to another Owner Operator.

    Although his answer was political, but the message I got was that Guild did not care about exodus of good pharmacists. Possibly they would encourage it so that the existing owners’ profitability was not challenged by the innovative ideas of young pharmacists.

    • TALL POPPY
      18/04/2019

      SaP: wonderful suggestion in principle. I had not thought about that one myself.
      Andrew: Yes pharmacy is a bit of a Ponzi scheme at present. It needs to change.
      Today I helped a young pharmacist look at several retail sites with reasonable rent – all under $50k per annum. All could be used as an amazing, low-risk entry-level pharmacy that would do well but unfortunately cannot be utilised due to current location rules.
      This pharmacist noted that pharmacy *assistants* are being offered up to $28/hr around her area and wanted to explore ownership as she was denied a pay rise. Although full of terrific ideas and enthusiasm, she did not realise the barriers to ownership and has now decided to leave the profession at the end of 2019, unable to fulfill her dream.
      [Sidenote to young pharmacists: do not fall for those pharmacies advertised for sale. They are more than likely crumbs-off-the-table and have heavily adjusted figures by brokers that are often unrealistic. Various onerous terms may exist in leases & franchise agreements also. Always get professional advice].
      Still a Pharmacist – kudos.

  3. Andrew
    18/04/2019

    The entire retail pharmacy industry in Australia is a Ponzi underpinned by the Location Laws, which are liable to change at any time for any reason. Without the location laws what is the inherent value of a pharmacy?
    At this stage the Guild’s primary function is to continue the status-quo, to put off the inevitable for just a little bit longer. Someone has to lose out, eventually.
    That’s why location law certainty is always the top of any agenda.

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