AMA urges government to show backbone on pharmacy rules

The Productivity Commission has called for restrictive pharmacy ownership and location laws to be axed six different times. Spoiler alert: no action was ever taken.

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The AMA is urging the Productivity Commission to take yet another look at “anticompetitive” pharmacy rules as part of a new study, just as new Guild representatives double down on cementing them.

In the medical association’s submission to the Productivity Commission’s national competition policy analysis study, it pointed out that the commission had called for restrictions on pharmacy ownership and locations to be removed on six separate occasions spanning a 25-year timespan.

The most recent occasion was its 2023 advancing prosperity inquiry report, where it took particular issue with the contradictory nature of restricting businesses that would contribute to community health.

“While almost all pharmacies are owned by pharmacists, major pharmacy operators have ‘effective franchise agreements with differing levels of control over the franchisee’,” the 2023 paper read.

“And in 2018, the four major operators were estimated to have 73% of market share.

“This level of concentration does not appear to be harmful to consumers – rather, it exemplifies that ownership restrictions contribute little benefit if any.”

Earlier reviews from the Commission made similar observations, including that the rules were “clearly more about protecting the vested interests of incumbent pharmacists than about promoting consumers’ interests”.

To that end, the AMA also pointed the Commission’s attention toward the Pharmacy Guild of Australia, which is the ninth biggest corporate donor to political parties.

Every five years, it renegotiates the community pharmacy agreement with the Department of Health and Aged Care. The most recent one was worth $18 billion.

“The CPA is developed in secret … without the meaningful involvement of other community pharmacy groups, consumers, doctor’s groups, independent experts, regulators, pharmaceutical manufacturers, wholesalers, or state and territory governments,” the AMA Productivity Commission submission read.

“While the government and the Department of Health and Aged Care have sought greater input from other stakeholders during the current negotiations of the 8CPA, the negotiations remain fundamentally the same.”

Negotiations for the upcoming 8CPA, as the AMA alluded to, are ongoing.

Both the Guild and DoHAC have committed to a 1 July implementation date, making it likely that the finalised agreement will be signed in the coming weeks.

The pharmacy owners’ group announced in mid-March that an additional $3 billion would be invested in community pharmacy as part of the deal.

It seems unlikely that there is any appetite to relax ownership or location rules for the incoming agreement.

At Guild elections earlier this week, five pharmacists from the outspoken Community and Pharmacy Support Group (CAPS) were elected to the NSW branch committee.

One of the new representatives, Emil Demayne, even namechecked the “critical location rules”  in his personal statement on the CAPS site.

 An Office of Impact Analysis assessment of DoHAC’s post-implementation review of the current agreement noted a lack of successful evaluation and assessment mechanisms in relation to the operation of programs funded through the initiative.

“This lack of accurate data is a critical issue that needs to be addressed,” the AMA said.

“Analysis of each CPA reveals that the lack of an evidence-base to support the design of each new agreement has resulted in a situation where incremental adjustments are made to minimise uncertainty, as opposed to larger reforms which would deliver a better outcome.

“This could be one of the reasons why the recommendations of successive reviews have not been implemented – because there is little evidence to support the design of alternative solutions.”

The major barrier to doing this, according to the medical association, is that the Guild is simply too powerful.

“[There are] reports that the Pharmacy Guild has discouraged members to participate in government efforts to obtain data to support efforts in understanding the costs associated with dispensing PBS medicines,” the AMA wrote.

Other recommendations for focus areas included in the AMA submission were innovative dispensing models, supermarket co-located pharmacies and the potential benefits of allowing non-pharmacist organisations like Aboriginal Community Controlled Health Organisations own and operate chemists.

The Pharmacy Guild of Australia is yet to make a submission to the Productivity Commission research.