|Implemented in this survey?|
Pharmacy Agreements represent a five-year collaborative relationship between the government and the Pharmacy Guild of Australia, which is a national employers' organisation. The agreements establish the remuneration pharmacists receive for dispensing medicines listed on Pharmaceutical Benefits Scheme (PBS). The Fourth Agreement came into effect in July 2006 and includes changes in the current payment arrangements for wholesale distribution of PBS medicines, pharmacists dispensing fees.
This is a fourth in a series and marks the renewal of an existing policy. The Federal Government is concerned about the long term growth of the PBS costs. It has identified the community pharmacy sector as a potential area to reduce government outlays. Under existing trends, the government estimates that pharmacy revenue will increase from 0.2 percent of the GDP to 0.7 percent in 2040. The government expects to achieve AU$350 million in savings over the life of the fourth agreement. The main features of the fourth agreement were:
Over the five-year period, the agreement will provide AU$11.1 billion in payments for the dispensing and supply of PBS medicines. This equates to an average of AU$11.38 per prescription dispensed, a nominal increase of 14.5% (6.2% in real terms) on the average payment under the third agreement (AU$9.93). The agreement will also provide AU$500 for funding of professional pharmacy programs and services. This will fund Home Medicines Reviews and programs that promote correct use of medications as well as E-Health initiatives.
The government expects the initiatives to achieve a reduction in the rate of growth of payments to the pharmacy sector "with the long-term aim of limiting pharmacy sector revenue to 0.4 percent of the GDP in 2040.
There are no new financial incentives. However there is an incentive for wholesalers to provide the whole range of PBS listed medications especially in rural areas. There might also be an incentive to open pharmacies in different locations as per new Location Rules.
The agreement is good news for pharmacists. Pharmacy remains one of the most tightly regulated sectors of the economy, with strict rules on the location and ownership, The Community Service Obligation (CSO) pool is designed to make it commercially viable for wholesalers to supply the full range of PBS medicines to pharmacies across Australia, The partial deregulation on pharmacy location and the wholesaler incentive to supply the full range of PBS medicines, regardless of pharmacy location and the relative cost of supply; should translate into better access to PBS medicines for consumers.
|Degree of Innovation||traditional||innovative|
|Degree of Controversy||consensual||highly controversial|
|Structural or Systemic Impact||marginal||fundamental|
|Public Visibility||very low||very high|
The PBS plays a very important role and is a key instrument for providing access to affordable medicines for Australians. The new policy should improve access to these medications in rural/remote areas.
The most controversial issue in this policy was the Pharmacy Location Rules. While this agreement "relaxed the rules" it is still uncertain how this will increase greater competition.
Pharmacy in Australia is a highly regulated protected business. Before the fourth agreement was signed the issue of pharmacies opening in supermarkets was hotly debated. Some commentators considered that Federal rules have sheltered pharmacy from competition. A government commissioned report established that the current rules had allowed pharmacies to increase their incomes without passing on the benefits to consumers, and that competition between pharmacists, including from within supermarkets, would lead to "the delivery of higher quality pharmacy services". The Pharmacy Guild as described by the National Competition Council is a strong lobby group. The Guild has been able to obtain big concessions from the government. It is understood that the Prime Minister, John Howard, played a crucial behind the scenes role to secure the CSO deal. The Prime Minister has been a key ally of the Guild for many years. Mr Howard and the Health Minister, Tony Abbott, have indicated they stand by "community pharmacies" against supermarket entry.
|Implemented in this survey?|
Since the early 1990s Australia has negotiated a series of five-year Agreements with the Pharmacy Guild of Australia to ensure the delivery of Pharmaceutical Benefits Scheme (PBS) listed items and other pharmacy services to the community. The third community pharmacy agreement expired in 2005. Formal talks for the fourth agreement began in April 2005.
The approach of the idea is described as:
renewed: This is the fourth in a series. It marks the renewal of an existing policy
|Minister of Health||very supportive||strongly opposed|
|Pharmacists||very supportive||strongly opposed|
|Consumer association||very supportive||strongly opposed|
|Australian Medical Association|
|Australian Medical Association||very supportive||strongly opposed|
The health policy will not lead not any formal piece of legislation.
|Minister of Health||very strong||none|
|Consumer association||very strong||none|
|Australian Medical Association|
|Australian Medical Association||very strong||none|
The government requested comments on the wholesale distribution payments proposal on the 9th of August 2005. Discussions were held between the government and Guild before the fourth agreement was signed. According to the president of Australian Medical Association (AMA), the agreement fails the public benefit test and it should be the last of its kind. The AMA has indicated that it will be monitoring the Agreement over the next five years to see if the "Government's targets are met and whether distribution costs do actually fall". The AMA will also follow the new pharmacy location rules closely. The Consumer Health Forum (CHF) only commented on the priority areas in community service provision. The CHF has highlighted the importance that funds are provided to projects that deliver services with positive health outcomes for consumers.
No formal evaluation of the policy has been announced; however funding was provided for research and development of services in community pharmacies. The Agreement has also identified some clear targets that should be straight forward to monitor in future years.
The government expects significant savings against the current forward estimates over the life of the next agreement, as well as substantial further savings over time, in order to improve sustainability of the PBS.
|Quality of Health Care Services||marginal||fundamental|
|Level of Equity||system less equitable||system more equitable|
|Cost Efficiency||very low||very high|
Quality: The policy's impact on quality is marginal
Equity: The policy aims to improve access to PBS funded medications specially in rural/remote areas.
Efficiency: Cost efficiency by government reducing expenditure on the PBS.
For Department of Health and Ageing fact sheets on the Fourth Goverment Agreement policy go to:
For information about Pharmacy Location Rules go to:
Parliament Library http://www.aph.gov.au/library/pubs/BD/2005-06/06bd061.htm
The National Competition Council of Australia http://www.ncc.gov.au/sector.asp?sectorID=13&page=#Article-280
Community Pharmacy in the Australian Capital Territory http://www.health.act.gov.au/c/health?a=sendfile&ft=p&fid=1130280430&sidFor
For the Australian Medical Association press release go to:
Australian Medical Association http://www.ama.com.au/web.nsf/doc/WEEN-6HX6RN