Penalties of nearly $200k for breaches


Authority sends strong message to all licencees about pharmacy ownership rules, with a warning about steep penalties

Pharmacy licensees need to abide by the various legal obligations connected with ownership, the Victorian Pharmacy Authority warns in its latest missive.

It says there have been several recent cases of company licensees failing to notify the Authority of changes to company shareholdings or directors.

Section 27 of the Pharmacy Regulation Act 2010 (Vic) on notifications for a company licensee states:

“If a licensee is a company it must notify the Authority within 14 days of a change to—
(a) the shareholding of the company; and
(b) the directorship of the company; and
(c) the office bearers of the licensee.
Penalty: 10 penalty units

“There have also been recent cases of licensees failing to notify the Authority of changes to pharmacy business commercial arrangements,” says the Authority.

“All licences are subject to a condition requiring notification of changes to pharmacy business commercial arrangements.

“If you are a licensee, or the director of a company licensee, and you intend to enter into a new commercial arrangement pursuant to which the pharmacy business is operated, or change existing arrangements, you must notify the Authority prior to those changes taking effect and provide copies of documents relating to the proposed arrangements,” it says (emphasis theirs).

Such changes may include, but are not limited to, entering into or changing an existing:

  • pharmacy trust
  • agreement for management services
  • licence agreement
  • franchise agreement
  • partnership agreement

It is also a condition of all licences that, where a trust is involved in the ownership of a pharmacy business, the Authority must be notified of any distribution made to a beneficiary under the trust.

Failure to notify the Authority of the correct changes, for example the appointment of a new director and shareholder of the company, within 14 days, will be investigated and may result in a panel hearing, it says.

The Authority also warns it may prosecute company licensees who fail to comply with section 27 of the Act.

In addition, it highlights that Section 5 of the Act permits company ownership of a pharmacy business only when all of the shares and the beneficial and legal interest in those shares are held by registered pharmacists.

Section 5 creates an offence with a penalty of up to 1200 penalty units (currently $198,264) in the case of a company, where shares were issued to a company that has not been provided a licence and is not a registered pharmacist.

“It appears that some pharmacists do not fully appreciate the licensing implications of carrying on a pharmacy business as a company versus a natural person,” continues the Authority.

Section 21 of the Act requires a person carrying on a pharmacy business to be licensed. A legal person may be a company or a natural person, explains the Authority.

If there is change from ownership by a registered pharmacist with a licence, to a company, the company should have applied to the Authority for a licence prior to the change of ownership.

A penalty of up to 1200 penalty units (currently $198,264) applies in the case of a company for a breach of section 21, warns the Authority.

“Licensees should take necessary steps to satisfy themselves that proposed ownership and commercial arrangements comply with the Act and not rely solely on their advisers,” it urges.

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