Frequently Asked Question - Why is Pharmacy Ownership Regulated?
Key components of regulation that underpin universal access to community pharmacy supply and services in Australia are the Location Rules (which are Federal, in the National Health Act) and the Ownership Rules which are State and Territory based.
Some lobby groups routinely advocate for deregulation so that developers, supermarkets and large corporations can have freedom to build and trade in profitable locations. Despite this, there is bi-partisan support across all states and territories, in favour of the patient and public interest.
Community Pharmacy is not a purist capitalist, free market model. This is because medicine and health services are not the same goods and services as other retail goods and services such as fashion or hospitality. Society still maintains an expectation that a minimum standard of health goods and services are supplied equitably by geography and socio-economic demography. Therefore, regulation is overlaid on the community pharmacy market to protect universal access by vulnerable patients. The government determines where the minimum standard is, principally by the Pharmaceautical Benefits Scheme which mandates the pricing structure, but also with the Location and Ownership Rules.
The Location Rules are regularly reviewed and reaffirmed by Commonwealth Governments in studies and inquiries. Governments recognise that freedom of action for pharmacy location means that owners will start concentrating in more profitable areas again.
Cate’s Chemist supports the current Location Rules because they are good public policy introduced by the Government to ensure a viable distribution network for PBS medicines where Australians need them. The more extensive geography, and equitable distribution of local pharmacies across Australia is the result of the introduction of the Location Rules in 1991. This corrected the concentration of pharmacies out of highly profitable CBD's and major shopping centres into suburban, medical centre, regional, rural and remote communities. There are less pharmacies now than prior to 1991 but they are more fairly distributed in suburbs, regionally, rurally and remotely. The system is leaner, more efficient (saving public monies) and more effective. The current network is by design and not an accident of a free market. The underlying principle of the current network is universal access to medicine, not profit.
The Ownership Rules are also regularly reviewed and reaffirmed by State and Territory Governments in studies and inquiries. Some lobby groups are routinely advocating for deregulation so that supermarkets and large corporations can own pharmacies. Despite this, there is bi-partisan support across all states and territories, in favour of the patient and public interest.
Clinicians such as doctors, nurses and pharmacists are held accountable to the patient and public interest by professional boards of the Australian Health Practitioner Regulation Agency (AHPRA). Large corporations do not act in the public interest and are not regulated by AHPRA - they act in the shareholders interest, which is routinely contrary to the public interest - often publicly.
Cate's Chemist believes all genuine health organisations would benefit from majority control and ownership by clinicians that are held accountable to patient and public interest rather than a shareholder's profit motive.
Dr Willett, Chair RACGP QLD in 2018, submitted in evidence during the Queensland Parliamentary Pharmacy Inquiry, “Quite frankly, in general practice, we have seen corporate models roll out and a more profit-driven ethos that tends to go with that. I think clinicians being directly responsible for the way the business is conducted does lead to better outcomes and fewer conflicts of interests … will lead to better outcomes if pharmacists continue to control their pharmacies.”
The longevity of bipartisan support for community regulation has provided balanced surety for planning the delivery of these important goods and services. The supply of medicine by community pharmacy is a much lower margin business than other unregulated goods and services, and deregulation would create a much higher risk, fragile venture inconsistent with the public interest in health.
For more on corporate interest see:
