Pricing overhaul

Dispensing fees, pricing discretion and pharmacy layout in the King Review firing line

Pharmacies should have no discretion to either raise or lower prices for PBS-listed medicines beyond the co-payment set by the government or the dispensed price, the Review of Pharmacy Remuneration and Regulation has recommended.

The interim report of the Review of Pharmacy Remuneration and Regulation (also known as the King Review), which was tabled in Parliament today has made a series of comprehensive recommendations for the overhaul of pharmacy payments, services and regulations.

Among the key items in its 224 pages is a call for the removal of medicine price variation, as consumers are confused by “the variation in pricing for medicines due to pharmacy pricing discretion”.

The report also recommends the current benchmark for a best-practice dispensing fee should be set within the range of $9 to $11.50, and says “this should be reflected in the average remuneration paid to a pharmacy for a dispense”.

The government should also establish a process to determine the minimum service requirements a pharmacy must meet in order to receive dispensing remuneration, the panel said.

The Pharmacy Guild of Australia expressed concern that “calculating dispensing remuneration on the basis of an efficient cost per unit of production treats a vital patient health service delivered by highly trained health professionals like a utility company transmitting electricity, gas or telecoms.” 

The Guild did, however, welcome the recommendation to abolish the contentious $1 PBS patient co-payment discount, introduced in the 2014 federal budget.

The panel claimed this discount had “not led to appropriate outcomes for consumers”.

The panel also called for remuneration for same services should be the same for all health professionals.

A series of recommendations would see an overhaul of the layout of many pharmacies, with the report calling for complementary medicines to be displayed in a separate area with easy access to a pharmacist for consumers, S2 and S3 medicines to be accessible only ‘behind the counter’ and homeopathic products to be not sold at all in PBS-approved pharmacies.

The report recommended overhauling pharmacy location rules, but in its executive summary, the panel says this will not be included in the final report “given the government’s recent commitment to continue the current location rules”.

Among other recommendations are:

  • A standard fee for the remuneration for compounding chemotherapy medicines in any approved facility, with no additional payment for medicines prepared in a facility that exceeds minimum standards.
  • A trial of machine dispensing in a “small number of relevant secure locations in communities that are not currently adequately served by community pharmacy”. Real-time interaction with a remote pharmacist would be essential to this program.
  • Only making payments under the Rural Pharmacy Maintenance Allowance (RPMA) to a single pharmacy in a 10km area.
  • Investigating the feasibility of a 24-hour telephone and/or internet ‘pharmacy hotline’ to provide Australia-wide medicine information.
  • Setting up an easily accessible and searchable ‘atlas’ of all community pharmacies, with information on their opening hours, services and programs offered and specific accessibility services.

Click here to see a message from review chair Professor Stephen King

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  1. vixeyv

    Isn’t HealthDirect our 24 hour medicine information line?

  2. Amandarose

    I have read about half the report which is 240 pages long.
    So far I agree with most of what he has to say except the part about Basing the script fee on an efficient pharmacy model. If rules were put in place to protect safety it could work. Discount chemists might be “efficient” but do they deliver adequate care and safety? Some do and others don’t. One in my local area is owned and ran by an excellent pharmacist who delivers excellent clinical advice and accuracy but he does often have a second pharmacist which would eat into his bottom line but ensures safety.
    Others with similar workloads in the area are manned with inexperienced and unenthusiastic pharmacists alone with huge work volumes and poor English. “They may be more ” efficient ” but offer less advice, and less safety and accuracy. I would hate the base rates to be based on example 2 where safety and care ar compromised for financial gain or just poor management.
    In order for it to work I think they would need a script per pharmacist cap that is safe. If that cap is exceeded the price per script should significantly drop to encourage safe workloads for pharmacists. I hesitate about having a hard cap as one can’t always predict the work that will come in. There is also the issue or wages that need to be considered- a low award should be increased to reflect market rates before calculating costs and that the extra costs to hire in rural areas is also an issue.
    Another interesting part of th review was the financial snap shot. 58% turn over less then 2 000 000 and 96% less then 10 million. 15% of pharmacies don’t make a taxable profit and size matters- big pharmacies do better but the return for investment of the best business is just average.

    • Philip Smith

      You could work on an average over a week for script caps.
      But who is going to audit this?
      We aren’t checked on much else unless something goes wrong or laws (not regulations or ethics guides) are broken.

  3. Philip Smith

    The summary above sounds good, but the devil is always in the detail.
    So no script discounting for non-claimable scripts, this would blow a few discount business models plans out.

  4. Nicholas Logan

    Taking consumer price negotiations out of dispensing would certainly free up pharmacists for meaningful professional interactions.
    Location rules are a toothless tiger when pharmacies can be put on ice for two years and bunny hop wherever they want.

  5. Debbie Rigby

    There are some positive comments and options for HMRs presented in the King Review. The report acknowledges that some programs and services involve “multiple key stakeholders and extend beyond the funding of PBS-related services”; and “the appropriate source of funding for medical programs that
    do not focus on medicine supply warrants broader consideration by government.”

    Option 7.3 states “The regulation and remuneration of professional programs offered by community pharmacies should not form part of future Community Pharmacy Agreements.”

    Furthermore, the Panel’s stated view, “it is clear that pharmacy programs and services should be supported where they are evidence based, are of benefit to patient health outcomes, provide value for money and are effectively integrated with other local health service”, supports the ongoing funding of evidence-based, cost-effective, collaborative programs.

    The report acknowledges the benefits of HMRs and the problems caused by the introduction of caps; and calls for a review of the caps as well as more targeted eligibility criteria, improved access to ATSI populations and hospital discharge referrals.

    It is also heartening to see comments that there is no evidence that the quality of HMRs varies from community pharmacy-based accredited pharmacists and independent or consultant pharmacists. The panel supports “continuation of the direct referral system provides better choice for consumers and GPs, who can refer to those consultant pharmacists who they believe provide a high-quality service.” Delivery of care should always be about quality of service and intraprofessional rivalry.

    The Panel agrees and supports the current additional training requirements and
    standards for pharmacists who carry out HMRs.

    So maybe these conclusions and options should trigger further discussion on the negotiation and funding model for professional services. Should Part B be a separate contract with multiple stakeholder signaturies for programs and services delivered in primary care including community pharmacy, pharmacists in general practice and Aboriginal health services, and other community health services. We have now a system for sharing of health records (My Health Record) and it will continue to improve in functionality. A whole-of-health view will drive delivery of programs across the continuum in collaborative models to reduce unplanned medication-related hospital admissions and readmissions, reduce medication misadventure, improve patient’s health literacy and better use of medicines. Community pharmacies will remain a vital part of this health service delivery, but flexible models must be allowed to meet patient’s needs when and where is appropriate.

    • Amandarose

      I was somewhat annoyed by the Guild pushing for pharmacy control of HMR’s again when they clearly were not as popular or well received when they controlled them. It was anti-competitive and did not allow the best pharmacists to prosper and did not encourage those with the best skills to make a living out of it. its a crying shame to have those who spend so much time perfecting their skills limited in there ability to deliver there services. I am glad this was not supported by the review. I just hope the politics of it won’t hinder any positive change.

    • Jarrod McMaugh

      The short answer to this question – “Should Part B be a separate contract” – is no.

      Not because it should remain part of the CPA, but because these services should be Medicare Item Numbers, and pharmacists should be able to access them via a Medicare provider number.

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