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Transcripts from the Prime Ministers of Australia

Transcript 12806

PUBLICATION OF THE COAG WORKING GROUP'S RESPONSE TO THE NATIONAL COMPETITION POLICY REVIEW OF PHARMACY

Photo of Howard, John

Howard, John

Period of Service: 11/03/1996 to 03/12/2007

More information about Howard, John on The National Archive website.

Release Date: 02/08/2002

Release Type: Media Release

Transcript ID: 12806

I am pleased to be able today to release the publication of the COAG Working Group';s response to the National Competition Policy Review of Pharmacy conducted by Mr Warwick Wilkinson AM.
The review made a number of recommendations relating to the ownership and operation of community pharmacies. A Working Group established by COAG, consisting of representatives from the Commonwealth government and states and territories, has considered these recommendations, including those on pharmacy ownership, in detail. The Working Group';s conclusions are outlined in the response being released today.
Pharmacy services are an important element of the overall Australian health care system. I am a strong supporter of maintaining the tradition of pharmacies owned and operated by pharmacists.
In accordance with the Wilkinson report';s recommendations, and the commitment I made at the last election, the Australian Competition and Consumer Commission has been asked to advise on the tax and related matters of Friendly Society-owned pharmacies to ensure that they have no tax advantage over pharmacist-owned pharmacies.
I believe that the implementation of the recommendations of the report by state or territory governments will help ensure the continued provision of professional pharmacy services and high quality health care in the community.
The full response of the COAG Working Group can be accessed at www.health.gov.au
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COAG SENIOR OFFICIALS WORKING GROUP COMMENTARY ON THE NATIONAL COMPETITION POLICY REVIEW OF PHARMACY
- EXECUTIVE SUMMARY -
Introduction
COAG referred the Final Report of the National Competition Policy (NCP) Review of Pharmacy (the Review) to Senior Officials for consideration by a Working Group of Commonwealth, State and Territory Officers. Mr David Borthwick, Deputy Secretary of the Commonwealth Department of Health and Aged Care chaired the Working Group.
Factors Unique to the Practice and Regulation of Pharmacy in Australia
The Terms of Reference require the Working Group to consider the Review Report mindful of factors unique to the practice and regulation of pharmacy in Australia.
Since the Review reported in February 2000, the Commonwealth has entered into the third Australian Community Pharmacy Agreement (ACPA) with the Pharmacy Guild of Australia for the period 1 July 2000 to 30 June 2005. The Commonwealth, while accepting that the Review';s recommendations on location of pharmacies may well offer real alternatives to the existing approach, has opted for an incremental and targeted easing of existing arrangements. The ACPA (which needed to be finalised before the Working Group commenced its deliberations) has effectively decided on recommendations 9 to 13 and thus effectively precluded consideration in a COAG context.
The Working Group notes that, as the location restrictions have such a significant impact on community pharmacy, discussions in the lead up to the next agreement between the Commonwealth and Pharmacy Guild of Australia should include relevant location considerations.
Approach to the Task
The Working Group has been asked to advise whether a co-ordinated response can be made by COAG on behalf of all jurisdictions to each recommendation and if not, advise on an appropriate response by either COAG or individual jurisdictions.
The Working Group suggests a COAG co-ordinated response to each of the Review';s recommendations on ownership and registration. These suggestions have been arrived at consensually on the basis of agreeing the principle and allowing jurisdictions to manage the implementation. The Working Group agreed that harmonising the regulation of all health professionals within a jurisdiction might be an important objective that will need to be considered in addition to gaining consistency in regulatory approaches to pharmacy across jurisdictions. This may mean that even though there is agreement in principle within the Working Group on the direction of pharmacy reform, the precise nature of how that is to be implemented at jurisdictional level may vary. It is within this context that comments on each of the ownership and registration recommendations are provided (whilst being in accordance with the agreed principles).
As noted above, the Review';s recommendations on pharmacy location restrictions have largely been superseded by the Commonwealth';s resolution of the third ACPA with the Pharmacy Guild of Australia. Nevertheless, the Working Group considered the Review';s recommendations and, where appropriate, has made observations for consideration in the proposed review of location restrictions in the lead up to the next agreement.
Compliance with the Competition Principles Agreement
Clause (5) of the 1995 Competition Principles Agreement requires that any retained regulation be reviewed within 10 years.
Working Group Conclusions
Ownership of Pharmacies
Of the recommendations, those relating to pharmacy ownership are the most sensitive and analytically complex. Accordingly, the Working Group has given most attention to these. Of the eight recommendations relating to pharmacy ownership, Recommendations 1, 4, 5 and 6 require particularly close scrutiny. Recommendation 1 relates directly to pharmacist only ownership of pharmacies. The Review';s Recommendations on the number of pharmacies a pharmacist can own (Recommendation 4) and freeing up restrictions on the commercial activities of pharmacists (Recommendation 6) provide opportunities for significant reform in this sector. On Recommendation 5, the treatment of friendly society pharmacies, the Working Group suggests consideration be given to varying the recommendation of the Review (in Recommendation 5(a)2) to enable any new friendly society pharmacies to come into the market.
Pharmacist-Only Ownership of Pharmacies
The Review found that ‘on-balance'; jurisdictions'; current pharmacist-only ownership restrictions provide a net public benefit and therefore should remain largely unchanged (Recommendation 1). The Review considered a complex mix of quantitative, qualitative and strategic issues in making this judgement.
The Working Group notes this judgement. When considered with the significant nature of other proposed reforms, especially the Review';s recommendations 4 and 6, the impact of removing the ownership restrictions could be too disruptive for the industry in the short term. Accordingly, the Working Group propose that this recommendation be accepted noting that this does not imply an obligation on the Australian Capital Territory or the Northern Territory to amend their legislation, as the territories legislation falls within the boundary of acceptable regulation as set out in Recommendation 1.
Number of Pharmacies Owned by Proprietors
The lifting of restrictions on the number of pharmacies an owner can operate is one of the most far-reaching reforms contemplated by the Review (Recommendation 4(a)). This reform has the capacity to significantly change the nature of community pharmacy. It provides the industry with an opportunity to develop more efficient pharmacy businesses. The Review suggests that lifting this restriction be monitored to guard against market dominance or inappropriate market conduct.
The Working Group supports this reform and considers that there are appropriate mechanisms already in place in the broader community to safeguard against the ill effects of market dominance. However, an avenue to monitor for adverse developments is in discussions in the lead up to the next agreement between the Commonwealth and Pharmacy Guild of Australia. NSW remains concerned as to the potential for the development of monopolies in regional areas, and as such, as part of the implementation process for this recommendation, the State will further assess the impact of the proposal on competition within New South Wales.
Permitted Exceptions to Pharmacist Ownership – Friendly Society Pharmacies
The Review concluded that friendly society pharmacies, as permitted players, should be treated consistently nationally and equitably with other pharmacies (Recommendation 5(a)(1)). The Working Group has given careful consideration to whether there is a sound basis for applying differing regulations to friendly society pharmacies compared to pharmacist owned pharmacies and has concluded that there is not. Therefore Recommendation 5(a)(1) should be supported.

Once Recommendation 5(a)(1) is accepted, it is difficult to see why it should be weakened in the manner suggested by 5(a)(2). The Review does not provide any support for 5(a)(2) and the Working Group';s conclusion is therefore that Recommendation 5(a)(1) should be implemented in full, from which it necessarily follows that 5(a)(2) which significantly qualifies 5(a)(1), should be rejected. If, however, a friendly society should demutualise and lose that character of primarily providing benefits to its members then it should no longer be a permitted exception to pharmacist ownership as there is little to distinguish it from a for-profit corporate body.
Pecuniary Interests in a Pharmacy Business
Recommendation 6 acknowledges that the present pecuniary interest provisions are not effective in ensuring that the practice of pharmacy can occur without undue or improper interference from third parties. The Working Group looked at a number of options in relation to Recommendation 6 and concluded that the relevant provisions of either the New South Wales Medical Practice Act 1992 or the Queensland Pharmacy Registration Act 2001 offer an appropriate model to address this issue.
Registration of Pharmacists
The Working Group endorses the legislative model of regulation established by the Review and notes that some jurisdictions have regulatory frameworks that could be regarded as going beyond what is required to ensure the safe and competent delivery of pharmacy services. Implementing Recommendations 14-19 may require each jurisdiction to review its legislation and repeal those parts that do not meet this criterion.
Some recommendations are contentious. The Working Group accepts Recommendation 15(b), noting that the means of achieving its intent, whether by establishing a system for direct appointment of all board members, or relying on a mix of appointed and elected members, are matters for the States to consider in implementation. Recommendation 16(b), which proposes the restriction of the practice of pharmacy, is supported only as a temporary measure pending the development of an acceptable set of protected practices. The Working Group has reservations about a move to solely competency-based assessment for either new registrants or re-registrants as outlined in Recommendations 16(g) and 18.

Transcript 12806