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Lead Contribution - The Proposed Review of Pharmacy Location Rules

A Collaboration - By Various i2P Writers
A Perspective on Restrictive Legislation and Rules Governing Australian Pharmacy

Issue 35: March 2005
Page: 1 of 1 Author's Profile | Send to a Friend | Printer Version

Editor's Note:
The Commonwealth Government is moving to a review of the location of pharmacies.
This was originally called for in a commentary from the CoAG committee (on the Pharmacy Review) around the time the Third Agreement was originally structured.
Location rules were considered anti-competitive by the committee at that time, along with a range of other restrictive pharmacy rules.
There is a strong possibility that location rules will be considerably relaxed under the Fourth Agreement, given there is a wide range of opposition and commentary opposed to these rules.

Various i2P writers have added their arguments and viewpoints for reader consideration.

By Rollo Manning

Should Approved Pharmacies for dispensing Pharmaceutical Benefits be located in Main Street shopping strips; regional shopping centres; medical clinics; Aboriginal Medical Services; aged care facilities; or registered nursing homes?

Now is the time for the Nation to have it’s say.

A review of the location of pharmacies approved to dispense Pharmaceutical Benefits to the Australian public has been announced.
This is part of the lead up to a possible Fourth Agreement between the Commonwealth Government and community pharmacy in Australia.
Parties to the negotiations to a possible Fourth Agreement are the Pharmacy Guild of Australia.
The Pharmaceutical Society of Australia and other organisations that have made it known to the Minister for Health that they want to have input to a Fourth Agreement.
Such organisations as the Australian Medical Association, the Australian Consumers Association, Woolworths, Coles Myer and the Australian Friendly Societies Pharmacies Association may be expected to submit judging on the public statements made over recent months on the question of pharmacy ownership.
Ownership, while a State/Territory matter, is closely linked to the Approval Number process.
Should the Commonwealth say that any service can have an Approval Number the pressure will be on the States/Territories to review their ownership laws.
At a time when even the OECD is asking Australia to review competition policy legislation that relates to pharmaceutical services, the pharmacy lobby will not be able to continue to be treated separately by the Commonwealth Government.
The Department of Health and Ageing has engaged the Allen Consulting Group to assist with an independent evaluation of the rules. The review will be happy to receive any submission.
The review is required to be finalised by 14 April 2005.
With this limited timeframe, there will not be an opportunity for public hearings. A draft report is required by the end of March.

Submissions may be emailed or sent by mail to:
Review of the Pharmacy Location Rules
Pharmaceutical Access and Quality Branch
MDP 38
The Department of Health and Ageing
GPO Box 9848
Canberra ACT 2601


Commonwealth Government and Pharmacy Guild of Australia





In accordance with commitments under the Third Community Pharmacy Agreement (Third Agreement, 2000-2005) between the Australian Government and the Pharmacy Guild of Australia, a joint review will be undertaken to examine the pharmacy location rules for approval to supply pharmaceutical benefits.  The rules have effect under the National Health Act 1953 and are due to expire on 30 June 2005.


Under the Third Community Pharmacy Agreement, incremental changes to the rules were introduced in two stages, July 2000 and July 2002.  These changes simplified the criteria to be met for new and relocating pharmacy approvals and reduced the distance between approved pharmacies approved to supply Pharmaceutical Benefits.  The parties to the Third Agreement undertook to review the location rules in preparation for any subsequent Agreement.

Objectives and Scope of the Review

The review of the location rules should:

  • Evaluate the net public benefit of the existing pharmacy location arrangements, assessed in terms of the location rules’ contribution to achieving the following policy objectives:
  • providing consumers with reasonable equality of access to quality pharmacy services in their local community;
  • provision of a quality, personalised pharmacy service to the Australian community through a network of well distributed, accessible and viable community pharmacies;
  • increased access to community pharmacies for persons in rural and remote regions of Australia;
  • maximising the value to the taxpayer by encouraging an effective and efficient community pharmacy network; [clause 4.1(f)]
  • continued development of an effective, efficient and well distributed community pharmacy service in Australia which takes account of the recommendations of the Competition Policy Review of Pharmacy and the objectives of the National Competition Policy; [clause 4.2(c)]
  • the maintenance of a community pharmacy network which supports the central tenets of the National Medicines Policy;
  • providing a stable and predictable environment for community pharmacy; [clause 4.1(d)]
  • generally, the fostering of a stable and viable community pharmacy sector in Australia. [clause 4.2(j)]
  • Consider the net public benefit of the present rules against the background of qualified workforce shortfalls and limitations.
  • Identify any significant anomalies in the application and administration of the current rules, including any deficiencies in the current administration and Australian Community Pharmacy Authority processes, and consider and report on alternatives to remedy any such deficiencies and anomalies.
  • On the basis of the findings, explore and, if considered appropriate, of substance, and an improvement to the current arrangements, report on alternative location arrangements for the equitable availability of quality community pharmacy services to the Australian community, having regard to the Policy Objectives outlines above and to transitional issues in respect of any tightening or relaxation of the rules.

Note: References in italics are to clauses in the Third Community Pharmacy Agreement


Ken Stafford
I'm not sure that I have much to say on this topic, I've been a hospital/government pharmacist for almost 30 years.
My feeling is that , if as claimed, Australia has one of the best pharmacy services in the world why change it?
Pharmacies should be located where there is a need, not where the sole driver is increased profits. Woolworths/ Coles-Myer and pseudo chain pharmacy groups are not necessarily concerned with a continued projection of a "profession" as opposed to a "trade" where pharmacy is concerned (an issue I had decided to write about this month).
Let's be honest - the big retailers would not be interested in "owing" pharmacies if they didn't think they could make a buck.
They are unlikely to be willing to provide pharmacy services in small towns and regional centres - the profit margin will not be big enough so why permit them to take the cream off the top?
I know I'll be reinforcing my image as a pharmaceutical dinosaur but if the system ain't broke why try to fix it?

Neil Johnston
i2P E-Magazine was founded at around the time Warwick Wilkinson was commissioned to prepare his far reaching report.
The important elements of the report have never been enacted, and they all relate to competition.
While the current review is limited to location rules, it should be broader and encompass all anti-competitive activity.
My views, as editor of i2P are well known through my consistent writings on the subject, and are summarised as follows:

1. Pharmacy ownership and control - should always be vested in pharmacists (except under special circumstances noted in 5 below).
2. Number of pharmacies owned - should be unlimited. The current licencing system through Approval Numbers has artificially increased pharmacy values to a level that are totally unrealistic, and are not allowing young pharmacists to become owners to provide succession for existing pharmacy owners (now becoming quite senior).
Let free market forces work here.
3. Pharmacy location- be it inside Woolworths, a medical centre or wherever - a pharmacist should be free to choose the location for a pharmacy.
4. Pharmacy structure - pharmacists should be free to employ any recognised form of business structure, including proprietary companies.
The structure relates more to the appropriate form for efficiency and control - managerial issues all.
It has nothing to do with downgrading the quality of professional service, and in fact, a company structure has the ability to deliver a range of professional services a sole trader could not even begin to look at.
5. Models of pharmacy - I see no reason why pharmacies could not evolve that are cooperative in nature and not owned by a pharmacist. This would relate more to rural/isolated areas where no pharmacy service exists and a need is readily identified.
If a community wishes to band together to provide the infrastructure for a pharmacy, to reduce the risk of a pharmacy investment, then why not?
In more densly populated competitive areas, this need would not arise.
And let's face it, the only areas that the Woolworths of this world are interested in are the high density areas.

At this stage of the debate, I am very pessimistic that pharmacy has held itself back through flawed policies that are now showing serious "cracks".
I think it is too late for a recovery to develop to offer a real competitive model to fend of the Woolworths and Coles continuing forays into pharmacy markets at all levels.
While the PGA has represented its direct members (35% of all pharmacists) very well, the PGA executive has not really demonstrated leadership by taking pharmacy into a progressive future.
There are a lot of new initiatives and good ideas, but no proper infrastructure for delivery.
The remaining silent majority of pharmacists (65%) feel totally ignored and manipulated by the PGA, because each and every decision relating to pharmacies influences employment, and the ability to develop service contracts with pharmacies.
By not taking the silent majority point of view seriously, the whole fabric of pharmacy has begun to disintegrate. The job of a pharmacist is primarily a "production line dispenser/checker".
There is insufficient cognitive work to sustain an independent living.
Let's face it - the job of a pharmacist has become disinteresting and of insufficient value to retain or attract new pharmacists to take up a pharmacy career.
While this current review into location rules is looking at just location, it cannot be considered in isolation.
It is only one of the anti-competitve rules hindering pharmacy development, and this aspect has even been noted by the OECD in its February report.
By the time pharmacy is forced to be competitive, it will be too weak and Woolworths will have easy pickings.
You can sense that Woolworths current strategies are more sophisticated and will prove to be infinitely more damaging uless pharmacists are allowed to defend themselves through policies that are diametrically opposed to the current versions, and allow the "silent majority" to participate in the decision making.

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