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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