Controversial pharmacy income deal under assessment

A deal that guarantees Federal Government money to community pharmacies even if the number of scripts falls is due to be assessed for its ‘fitness for purpose’ by July.
 
As reported by News Corp this week, the Seventh Community Pharmacy Agreement (7CPA) contains a clause to maintain income to pharmacies even if the number of scripts falls below predicted levels.
 
The agreement is known as the ‘volume-based remuneration adjustment mechanism’ and was finalised between the Pharmacy Guild and the previous Federal Government in 2020.
 
It is the first time the agreement had been put in place.
 
However, it has been cited as a barrier to increasing the length of dispensing times for 143 common medications to 60 days, which was recommended by the Pharmaceutical Benefits Advisory Committee (PBAC) in 2018.
 
The PBAC recommendation is strongly supported by the RACGP and patient groups, who say it would save money and be more convenient for people with prescriptions.
 
However, it has not yet been introduced after strong opposition from the Pharmacy Guild – and if it were put in place, it would likely cause prescriptions to dip below previous estimates and trigger further subsidies under the agreement terms.

Independent MP Dr Monique Ryan, who worked as a paediatric neurologist before going into Parliament, has also called for the PBAC recommendation to be brought in – and this week publicly criticised the 7CPA deal.

‘It’s perverse that our government has guaranteed subsidy payments to pharmacies, and allows them to jack up the price of medications, when so many Australians are struggling to pay for their prescriptions,’ Dr Ryan said.
 
It is a sentiment shared by RACGP President Dr Nicole Higgins.

‘I suppose given the power of the Pharmacy Guild I shouldn’t be surprised that this clause exists, yet I am still gobsmacked,’ she said.
 
‘At a time when Westpac and the Pharmacy Guild have reported that spending in pharmacy has increased by 33.7% to almost $124 million in January 2023, on top of the billions paid to pharmacy through the Community Pharmacy Agreement, you would think that pharmacies shouldn’t need a funding guarantee.
 
‘This clause gives them a boost when sales are down because people are well. Could you imagine doctors being given a bonus payment by government when people don’t need to see a doctor?’
 
Dr Higgins says she hopes politicians will act to save patients money and time.
 
‘Our elected leaders should now be acting in the interests of the public good and doing everything possible to bring down the price of lifesaving medicines,’ she said.
 
The move to extend dispensing time lengths from 30 to 60 days is overwhelmingly favoured by GPs, with a newsGP survey this month recording 85% of readers as saying they think it would benefit patients.
 
Under the terms of the 7CPA deal, the Department for Health and Aged Care (DoH) and the Guild are due to assess the payment guarantee and ‘whether it remains fit for purpose’ in the third financial year of the contract, which will end on 30 June.
 
‘If required by the outcome of that assessment, the department and the Guild will agree on any changes to the processes described in this clause 3 and Appendix B arising from that assessment,’ the contract states.
 
The DoH told newsGP that the task was in progress as per the most recent meeting of the Pharmacy Stakeholder Consultation Committee in January.
 
That group consists of the DoH, the Guild, the Pharmaceutical Society of Australia, as well as representatives from the Consumers Health Forum of Australia and the National Aboriginal Community Controlled Health Organisation.
 
The DoH did not directly respond to an inquiry about how the assessment works.
 
Under the terms of the contract, if the number of prescriptions falls below estimates – either immediately below or 2% below depending on timing – a further subsidy calculation is triggered for the following financial year.
 
The reverse is also true, with a formula in place to reduce the Commonwealth Price received by pharmacies for dispensing medications if the volume is more than 5% above estimates.
 
‘This is to ensure pharmacies have stable income from dispensing PBS and RPBS medicines,’ the DoH states on its website. ‘It also protects the Australian Government from unexpected expense.’
 
It also says that there was no change in remuneration for the first two assessment periods up until the end of 2021, with no information yet published for 2022.
 
Queensland GP Dr Evan Ackermann points out that the contract includes a clause to ensure ‘predictable remuneration for community pharmacies to support their viability’.
 
‘I have never seen anywhere else that a Government guarantees the income and viability of a private business – but here it is,’ he told newsGP.
 
‘No matter what, pharmacy will get paid. Could you imagine if that happened for every general practice?
 
‘The assumption that it is based on – the public benefit of accessible pharmacies in primary care – is outdated as there are now other means of delivering medicines to the public.
 
‘It should be omitted in the next agreement.’
 
Dr Ackermann also believes the Government should consider extending prescription times even further than 60 days.
 
‘With respect to prescription quantity of two months, this is small compared to three-month quantities in place overseas,’ he said.
 
‘We should catch up with the rest of the world and allow 90-day script volume.
 
‘There is no reason for continuing one-month packs.’
 
Former hospital pharmacist and Dr Higgins’ GP colleague Dr Mark Raines agrees.
 
‘I’m sure most patients will see this as a great convenience,’ he told newsGP. ‘Why not six months or even 12 months at once?
 
‘The other thing to consider would be a 12-month script for chronic disease medication which we can already prescribe for some, like statins for people with care plans.’
 
The 7CPA is valid until the end of June 2025.
 
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