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Pharmacy review must decide if pharmacists are healthcare professionals or retailers.

Australia’s pharmacy sector has an identity crisis. Is it part of the healthcare sector? Is it just another retailer? Numerous reviews have given their answer to the question but reform has been elusive. Over the same period – operating without any special regulations - most of the milk bars went away. But mostly, the pharmacies are still there, albeit with discounters and banner groups eyeing off their PBS approvals.

The panel now reviewing Australia's pharmacy sector will need strong data and a laser focus on its terms of reference if its report is to generate a reform plan that cuts through  well-resourced but ultimately self-interested advocacy. Their interim report is due “shortly”.

This time around the panel has received plenty of advice. Pharmacy peak bodies, wholesalers, discount chemists, not-for-profit friendly societies, hospital owners, think tanks and individual pharmacies have all had their say.

If it is wise to back self-interest - because at least you know it is trying - then on the evidence of 500-plus submissions to the review, it is trying very hard indeed. The thousands of pages include duelling data, claims to the high moral ground, argument by stereotype and plenty of emotion.

But the terms of reference provide a firm footing for the panel to cut through. It is asked to focus on what consumers value from community pharmacy, on what promotes access and quality and to consider the long-term sustainability and equitable distribution of the PBS as a taxpayer-funded resource.

Two key issues on which the panel must form a view are location and ownership rules.

Pharmacy sites approved to supply PBS-subsidised medicines are determined by applying pharmacy location rules that restrict where approved pharmacies can be established or relocated. The Commonwealth controls those rules.

In addition, State-based legislation imposes restrictions on who can own a pharmacy. Generally, only registered pharmacists or their families are allowed to own or control pharmacies, with exceptions for friendly societies based on historical grandfathering rules.

These rules have become totems in the propaganda war that has beset this sector for decades.

Community pharmacies say the location rules promote community access by spreading them out - allowing pharmacies to make a living while delivering professional advice to their communities on medicines and related matters. They say co-locating pharmacies in supermarkets would undermine these goals.

But others say these rules are antiquated, do more to inhibit competition than promote quality service and actually impede integrated healthcare models. For example, modern policymakers support investment in primary care including GPs and medical centres as a way of keeping people out of hospital. It makes little sense for medical centres and GP clinics to be prevented from co-locating with pharmacies as there are obvious synergies. Similarly, it makes no sense for hospitals to be prevented from supplying a full range of medicine services to patients, particularly as outpatients and people leaving hospital are vulnerable to misadventure. At the moment, hospital pharmacies can only dispense to inpatients. Hospital pharmacies account for 20% of all PBS expenditure.

Location rules do more than any other regulation to highlight the pharmacy sector’s identity crisis. Community pharmacists say they deliver important healthcare services and therefore should be treated differently to other retailers. But they also reject the governance model that applies to healthcare businesses – there are no location or ownership rules for hospitals or medical centres.

In relation to ownership rules, community pharmacies say that the small business structure supports good service because the proprietors have an economic incentive to attract and retain custom. Dispersed ownership also protects the Commonwealth from over concentration which would lead it to negotiate with a small number of entities with substantial market power.

However, there many examples of pharmacy groups employing pharmacists who do not have any ownership interest in the pharmacy they work in – for example, banner groups and discount pharmacies. Professional standards, training and accreditation schemes are surely more targeted ways of managing quality and safety than ownership rules. The MBS dwarfs the PBS for government expenditure and concentrated ownership does not seem to have been an issue managing costs of GP visits. The public can buy and sell shares in listed hospital groups like Ramsay and Healthscope – the same companies that are permitted to perform heart surgery on their shareholders. The same person cannot buy shares in a pharmacy company unless they are a pharmacist.

The panel must determine what is self-interested advocacy, and what can be supported by evidence or general economic and regulatory principles.

Advocate Position on location rules Position on ownership rules
Peak body for all pharmacists Insufficient data to comment but no co-location with supermarkets Retain
Peak body – community pharmacists Retain Retain
Hospital pharmacists peak body Supports a full review Supports a full review
Australian Medical Association Supports co-location of medical centres and pharmacies. No concerns with supermarkets having pharmacies onsite No comment
Wholesalers Retain No comment
Discount chains Abolish but include incentives to avoid market failure  Abolish
Not-for-profit friendly societies Supermarkets okay if they pass on lower rents to pharmacy owners(!) and might be okay in regional hospitals Retain
Hospital owners Relax so that smaller private hospitals can offer section 90 pharmacies and convert section 94 to section 90 pharmacies so full dispensing to all, not just inpatients No formal views
Independent think tanks Abolish in urban settings Abolish but enhance regulation to support competition, access and quality

It is pleasing to see that the panel has commissioned a number of independent reports to assist its analysis. This includes consumer market research into the attitudes, expectations and experiences of Australian consumers and practising pharmacists. This is supported by targeted consultations with Consumer Health Forum member organisations also seeking to identify consumer attitudes and priorities. The panel is also accessing analysis of literature relating to the models and lived experience in overseas jurisdictions.

For many years, governments of all political persuasions have been in office, but it is said that the Guild is in power. The review panel has an opportunity to peel away self- interest and provide a model for the pharmacy sector to takes its place as an integrated part of the healthcare sector for decades to come.