Sixth Community Pharmacy Agreement: the details

signing document - Sixth Community Pharmacy Agreement

The Sixth Community Pharmacy Agreement between the Pharmacy Guild of Australia and the Commonwealth has now been signed, and is expected to commence on 1 July.

It will run until 30 June 2020. The 6CPA is part of a wider package of PBS changes, which the Abbott Government plans to legislate during Parliament’s current sitting.The PBS access and sustainability package

This wider Package includes:

  • substitution of biosimilar medicines at the pharmacy level;
  • freezing of the indexation of the CSO;
  • increase in number of time a year that PBS medicines can change price;
  • de-listing of certain OTC medicines on the recommendation of the PBAC;
  • expansion of the Safety Net 20 Day Rule;
  • refocusing the PFDI on medicines where there is a brand price premium;
  • application of price disclosure to generic combination medicines;
  • one-off 5% price reduction to F1 medicines after five years;
  • removal of originator brands from price disclosure calculations;
  • transfer of the National Diabetes Services Scheme to the wholesalers CSO;
  • optional discounting of co-payments by pharmacies to a maximum of $1; and
  • extension of the Location Rules to mid-2020.

The Guild says it recognises the necessity of the wider package to resource greater investment in the sector and the PBS in general.

It says it will provide “all reasonable assistance” to facilitate and support the measures in the wider package, apart from the proposed option for pharmacies to discount the script copayment by up to $1. This measure is a matter for the Government.

The commencement of the 6CPA is contingent on the passage of the legislation to implement the wider package.

If the wider package legislation looks unlikely to pass before 30 June, the Guild and Government will reconvene to consider the arrangements for community pharmacy, as the 5CPA expires on June 30.

Pharmacy remuneration

All fees will be indexed annually by the official Consumer Price Index.

From 1 July, the dispensing fee will go up by 17c to $6.93 for ready-prepared prescriptions. From 2016 the fee will be indexed annually on 1 July by CPI.

A new Administration, Handling and Infrastructure (AHI) fee will replace the pharmacy mark-up component of remuneration. The AHI “substantially delinks pharmacy remuneration from the price of medicines” and recognises the non-professional costs of delivering the PBS; compared to the existing markup structure, which would have continued to trend down over the five years of the 6CPA due to falling PBS prices, the AHI instead provides an immediate overall increase compared with current mark-up.

From 1 July 2015, the value of the AHI will be:

  • Where the Approved Price to Pharmacist (wholesaler PBS list price) is up to $180.00: $3.49 per prescription
  • Where the Approved Price to Pharmacist is between $180.00 and $2,089.71: $3.49 plus 3.5% of the amount by which the price exceeds $180
  • Where the Approved Price to Pharmacist is $2,089.71 or above: $70.00

From 2016 the AHI Fee will be indexed annually on 1 July by CPI.

The Premium-Free Dispensing Initiative will increase by 4c to $1.72 but will apply to a smaller number of prescriptions than currently. Under the 6CPA the PFDI will no longer apply when there is not a brand premium on any substitutable brand of the item.

The funding removed from the PFDI as a result of the change has been moved to the new AHI fee.

From 2016 the PFDI will be indexed annually on 1 July by CPI.

The Dangerous Drug Fee is set to rise, by 21 cents, to $2.91, the first increase in this fee since 2006. From 2016 the DDF will be indexed annually on 1 July by CPI.

Allowable fees for the pricing of under co-payment prescriptions will continue to apply in addition to all other fee arrangements as above.

From 1 July 2015 the allowable fees for ready-prepared items will be:

  • Safety Net Recording Fee: $1.17 (up from $1.15 currently)
  • Additional allowable fee: $4.27


As under the 5CPA, the Premium-free Dispensing Incentive won’t apply to under co-payment prescriptions; instead, the AHI, which is to apply to the pricing of all prescriptions, will apply.

There is no obligation to comply with the allowable fees and they are not Commonwealth Government initiated. It is up to each pharmacy to determine their own charges for under co-payment prescriptions.

Once systems are established, pharmacies will be required to transmit through PBS Online the price charged for under co-payment prescriptions.

In addition to all fees that apply to ready-prepared items, including the new AHI fee, an extra $2.04 will apply for extemporaneously prepared dispensing (unchanged from the 5CPA).

The Department and the Guild will conduct an annual reconciliation of total actual versus estimated total community pharmacy and wholesaler remuneration, comparing actual PBS and RPBS prescription volumes with the estimates included in the 6CPA document.

If there is a material difference between actual volume and estimated volume, a risk sharing arrangement may be implemented to address the variance.

A review into remuneration will be conducted to inform possible pharmacy remuneration arrangements for the 7CPA (July 2020 onwards).

This review won’t be able to be used to change remuneration under the 6CPA.

And from 1 July 2016, it is intended that product supply and delivery under the National Diabetes Services Scheme will be redirected through the established CSO distribution network to community pharmacies with pharmacies that supply NDSS products receiving a payment of $1 for each product supplied. This will not be indexed.

The Government plans alterations to the structure of remuneration for chemotherapy infusions; this is intended to make some payments direct to compounders, including third party compounders.

The implementation of any new arrangements will follow consultation with pharmacists and chemotherapy compounders.


Wholesalers and the Community Service Obligation

Current wholesaler mark-up arrangements will continue to apply under the Sixth Agreement.

No indexation will apply to the CSO funding pool. Wholesalers will still be required to supply section 85 medicines under CSO arrangements at or below the official PBS price to pharmacists, and will not be permitted to impose new or additional fees where the supply is covered by the CSO requirements.

The CSO requirements are currently being examined and may change; the Guild says it will keep its members informed about the issue.

The remuneration review will be used to examine wholesaler remuneration during the 6CPA.


Community Pharmacy Programs

Total funding for community pharmacy programs under the 6CPA will rise to $1.26 million, which is set to fund continuing pharmacy programs, a Pharmacy Trial Program, as well as new and expanded programs and services.

Many of the Community Pharmacy Programs which existed under the 5CPA will continue at their current level of funding during the first year of the 6CPA. These have been allocated $613 million.

They will be the subject of a cost-effectiveness assessment, to inform continuation and investment later in the Agreement.

These programs include:

  • Medication Adherence Programs – DAAs and Staged Supply.
  • Medication Management Programs – Clinical Interventions, Home Medicines Reviews, Residential Medication Management Reviews and MedsCheck.
  • Rural Support Programs – Rural Pharmacy Workforce Program and the Rural Pharmacy Maintenance Allowance.
  • Aboriginal and Torres Strait Islander Programs – QUMAX, S100 Support Allowance, Scholarships and Traineeships.
  • eHealth – Electronic Prescription Fee.


The Pharmacy Trial Program will trial new and expanded community pharmacy programs; $50 million has been set aside for it.

It will seek to improve clinical outcomes for consumers, and extend the role of pharmacists in the delivery of healthcare services through community pharmacy.

There will be a consultation process regarding the program’s priorities and the trials that will take place.

There will also be $600 million in additional funding to support new and expanded programs which will be delivered through community pharmacy.

Up to $122 million of these funds has already been set aside for DAAs and Staged Supply, subject to cost-effectiveness outcomes and decisions by Health Minister Sussan Ley.

The Guild says the Commonwealth has already acknowledged the strong likelihood that these programs will be judged cost-effective, and recommended for further expansion.


Location rules

The Location Rules are set to continue unchanged throughout the 6CPA, until it expires on 30 June 2020.

The current rules are unable to be changed during the 6CPA unless there is an express agreement between the Pharmacy Guild and the Government.

However, during the 6CPA there will be a public review of the rules and their role in supporting access to PBS medicines.

According to the Guild, this review is an opportunity to expand on its recent research which it says clearly showed the economic and community benefit of the Location Rules.

The Location Rules result in superior levels of access compared with other sectors including supermarkets, banks and medical centres, it says.

The Guild plans to use the Review as one opportunity to raise with the Government several issues related to the Location Rules’ current workings.

Source: Pharmacy Guild of Australia

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