Location rules: What has changed?


A go-to guide on what you need to know about the changes to pharmacy location rules, which come into effect from 3 October, by Stephanie McGrath

Key changes to the Pharmacy Location Rules will come into effect from 3 October 2018 and will apply to applications made on or after this date (subject to limited exceptions described below).

Most of the changes will affect pharmacies within shopping centres or looking to relocate out of shopping centres, and may provide much needed strategic advantage when dealing with a formidable shopping centre landlord.

Relocating out of large shopping centres

In response to the need for greater flexibility in respect of relocating out of large shopping centres, the new rules will allow a proposed new site to be within 1.5km (formerly 1km) of a large shopping centre and only needs to be at least 300m (formerly 500m) from any other approved pharmacy.

In addition, the definition of a large shopping centre has changed to include a supermarket with a gross leasable area of 2,500 (as opposed to 1,000) square metres.

Ending back-filling

The loophole known as “back-filling” (that is, where a pharmacy relocates out of large shopping centre and then immediately applies for a new pharmacy in the centre) has been closed.

If applying for an additional second approved pharmacy (where the large shopping centre has between 100-199 commercial establishments) or  additional third approved pharmacy (where the large shopping centre has at least 200 commercial establishments) in a large shopping centre, applicants will need to provide evidence that no approved premises have relocated out of that large shopping centre in the 12 months prior to the date of application.

Pharmacists looking to move into a large shopping centre will need to carry out astute due diligence to ensure their application will not be rejected.

From a leasing perspective, the new rule will restrict the ease with which landlords of large shopping centres may grant leases to new pharmacies in their centre.  As a result, the new rule could present as a potential advantage for some pharmacists already within a large shopping centre when negotiating their lease renewals with a formidable landlord.

Medical centres

The distance that a proposed pharmacy in a new large medical centre needs to be from existing pharmacies has been reduced from 500m down to 300m.

Staying in one location

Pharmacies will have to remain in one location for 5 years (formerly 2 years) prior to relocating.

New rule for distance between approved premises

A new rule has been introduced that allows pharmacies to relocate between 1km and 1.5km from their existing location as long as the proposed new site is:

  • at least 300m (where the existing premises are not in a small shopping centre, large medical centre or large private hospital) from any other existing approved premises; and
  • at least 500m (where the existing premises are in a small shopping centre, large medical centre or large private hospital) from any other existing approved premises.

Applications

Generally speaking, applications made on or after 3 October 2018 will be assessed under the revised Rules and will require the use of a new application form.

However, by way of exception, if:

  • a pharmacist can show evidence that a legal right to occupy the proposed new premises was in place prior to 3 October 2018; and
  • the relocation application is made before 3 April 2019,

then:

  • the existing requirement of a supermarket in a large shopping centre being at least 1,000 (instead of the increased 2,500) square metres will apply; and
  • the existing requirement to remain in the same location for 2 years (instead of the increased 5 years) will apply.

Further information

If you require any specific information or assistance with any potential location rule applications based on these changes, please do not hesitate to contact the writer on (03) 8628 2039 or stephanie@robertjames.com.au.

Stephanie McGrath is a Senior Associate at Robert James Lawyers practising in commercial law with a focus on health, business and property across Australia.

Stephanie’s significant pharmacy experience includes buying and selling interests in pharmacies Australia-wide, advising clients in relation to compliance with the requirements of different State and Territory Pharmacy Regulatory Bodies, applications to Medicare, applications and objections under the Pharmacy Location Rules and Ministerial Discretional Applications, partnership disputes and much more.

Disclaimer: The content of this article is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. You should seek legal or other professional advice before acting or relying on any content of this article.

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