Pharmacy regulation an area of ‘policy purgatory’

Liberal Democrats Senator David Leyonhjelm
Liberal Democrats Senator David Leyonhjelm. Image: Facebook

Disappearing reports into the pharmacy sector are a sign that “the pharmacy industry has far too great an influence on its own regulation,” says David Leyonhjelm

The Liberal Democratic Party Senator has presented the interim report of the Select Committee on Red Tape’s inquiry into pharmacy rules to the Senate, following its introduction during the last session of Parliament.

He says that while community pharmacies are an important part of the health landscape, “red tape is hampering pharmacies’ ability to deliver efficient and high-quality care”.

The location rules in particular are working against the interests of consumers, Senator Leyonhjelm told the Senate.

“They determine where a pharmacy can be established. They govern whether an existing pharmacy can be expanded, contracted or relocated and prevent the establishment of a new pharmacy within a certain distance from an existing pharmacy.

“It’s claimed that this prevents clusters of pharmacies from developing in prosperous metropolitan areas and thus somehow results in more pharmacy services in regional areas.

“Supposedly, this leads to more small country towns having a pharmacy. It undoubtedly results in fewer pharmacies in prosperous areas of metropolitan areas, and apparently this is meant to be a good thing.”

He said that the Pharmacy Guild’s claim that consumers support its stance on retaining the location rules is “obviously completely untrue if we are talking about metropolitan consumers”.

“Why would they support fewer pharmacies? It’s just as inconceivable as claiming they would support fewer food outlets or clothes shops.

“The Guild also says it’s supported by business owners, who have invested $15 billion in the sector. Now, that is undoubtedly true. The Pharmacy Guild represents pharmacy owners, not consumers and not pharmacists.

“By preventing the establishment of competition to existing pharmacies, the location rules clearly serve the interests of pharmacy owners.”

He cited the Grattan Institute and Australian Medical Association as stakeholders who did not agree with the Guild, and included among them the PSA, after its national president Shane Jackson said the effect of the pharmacy rules was an issue for some members.

However Dr Jackson later clarified to the AJP, at the time the interim report was handed down, that “Yes, some of our members have cited that location rules have been a barrier”.

But “the PSA supports the concept of location rules,” he said.

Senator Leyonhjelm then examined past reviews and reports which have made recommendations regarding rules governing the pharmacy sector.

“The review of pharmacy remuneration and regulation, also known as the King review, received few, if any, submissions approving all aspects of the pharmacy rules,” he said.

“Its interim report pointed out that two recent reviews have recommended the removal of these rules: they are the National Commission of Audit’s 2014 report, Towards responsible government, which found that deregulating ownership and location rules could encourage competition within the sector, leading to more efficient delivery and the development of alternative retail models; and the 2015 competition policy review, or Harper review, which reported that ownership and location rules are anticompetitive and contrary to the objectives of the National Medicines Policy, limiting consumers’ ability to choose where to obtain pharmacy services and suppliers’ ability to meet consumer demands.

“Since the King review delivered its interim report, the Productivity Commission has also published its report Shifting the dial: 5 year productivity review, which recommended changes to the community pharmacy model.”

There have been seven reviews since 2000 there that considered the pharmacy rules, he said.

“As the Grattan Institute describes it, pharmacy regulation is an area of ‘policy purgatory’ in which the Australian government chooses not to implement change.

“Report after report disappears, with the only explanation being that the pharmacy industry has far too great an influence on its own regulation.”

A spokesperson for the Pharmacy Guild says that “It is unfortunate that Senator Leyonhjelm fails to recognise the purpose of the pharmacy location rules which is to ensure that all Australians have timely and equitable access to PBS subsidised medicines professionally dispensed through a well distributed community pharmacy network.

“The location rules help to ensure that the Government’s PBS related health policy objectives are achieved efficiently and to a consistently high quality standard.” 

Senator Leyonhjelm also said the Committee felt community pharmacies should not be exposed to costs attributable to wholesalers which are passing on costs arising from Government-imposed obligations; and that better digital support for the PBS and RPBS is urgently needed.

It also recommended in the interim report that through COAG, the Federal Government pursue options for uniform regulation legislation regarding the supply of pharmaceuticals.

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  1. PharmOwner

    I would like Senator Leyonhjelm to explain on what grounds he considers the Grattan Institute (which as I understand it, is a think tank) and the AMA to be stakeholders in the pharmacy industry. Surely pharmacy industry stakeholders would be the PSA, Pharmacy Guild, SHPA, consumers, government, wholesalers and drug companies.

    • Bryan Soh

      hmm and you don’t consider practising pharmacists as industry stakeholders?

      • PharmOwner

        Hi Bryan, yes, absolutely. That’s why I mentioned PSA and SHPA

        • Bryan Soh

          Hey pharmOwner, I apologise for overlooking your previous statement. I have been following your comments on this forum with some interest, and I would love to get your honest, no bs take on certain issues within pharmacy. Is there a way we can correspond?

          • PharmOwner

            Hi Bryan, you can shoot me an email at

          • Bryan Soh

            great thanks. will get in contact soon

  2. H Shan

    The Guild is protecting the interest of only current owners. Working pharmacists are just a cost component for them. Their effort to block spreading of the cheapest pharmacy chain in the name of location rule proves that they don’t care about consumers.

    To defend their position, they often say that because of the location rules, rural people are getting pharmacy services. This is wrong. Rural people are getting pharmacy service because of RFPMA (rural pharmacy maintenance allowance). Just stop RFPMA and see how many pharmacy operates in small rural town.

    Govt should abolish location rule in big cities to increase competition which will lead to savings in PBS. This saving can be used to increase RFPMA. Guild’s influence on major political parties give an impression that protectionism has become dirty in this sector.

  3. GlassCeiling

    Simon Birmingham Federal Minister for Education recently stated in rejection of increased Childcare funding that ” it is not the job of government to protect certain business models.”
    Early childhood and Pharmacy have government funding in common and this leads to lots of heads in the funding trough. Landlords believe as a funded entity it can and should charge premium rent, owners spend big on fit outs and lining their pockets for the great ‘ risk ‘ they have taken and then put a hand out to government for more funding to pay staff adequately.
    Government need to ensure adequate wages and wage rises for staff to ensure rent and fit out are secondary to staff costs.

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