Last week the peak body for pharmacy owners, the Pharmacy Guild, reacted strongly to the Federal Government’s announcement that it would accept a 2017 recommendation from the Pharmaceutical Benefits Advisory Committee to allow doctors to issue extended prescriptions to their patients for a select number of medications.
Below Croakey editor Jennifer Doggett, with input from Charles Maskell-Knight and Dr Lesley Russell, unpacks the reasons why the Guild’s reaction may not be having the impact it expected and what this means for the future of community pharmacy funding in Australia.
Jennifer Doggett writes:
The Federal Government’s recent announcement, “allowing millions of Australians to buy two months’ worth of medicine for the price of a single prescription”, was met with a fast and furious reaction from the Pharmacy Guild of Australia.
The response was straight out of the Guild’s playbook, a campaign using both Guild leaders and members, with consistent messaging which capitalises on the trusted role of pharmacists as health professionals to argue for what is essentially the commercial and business interests of pharmacy owners.
In mainstream and social media, in Parliament and out in the community, the Guild and its members wasted no time in cranking out campaign and lobbying materials arguing against the proposal, including efforts to target backbenchers and parliamentarians in marginal seats.
It’s an approach that has consistently delivered for the Guild in the past, allowing them to stave off threats of reform despite a series of reports and reviews that have found current policy and regulatory settings benefit pharmacy owners over consumers.
Not everything has gone the Guild’s way – they lost the battle with doctors over codeine up-scheduling – but by and large they have had a greater influence over policy under successive governments than most, or perhaps any other, interest group in the health sector.
As a health economist, Professor Henry Cutler, wrote in The Conversation today:
The Guild… understands healthcare and how health policy is made. It has a reputation for shaping government health policy envied by many a healthcare peak body.”
Therefore the Guild could be forgiven for relying on its tried and tested tactics in fighting the Government’s move on extended prescribing, drawing on the expertise and resources of their in-house communications experts and external lobbyists C|T Group (formerly Crosby Textor).
Losing the public relations war
However, unlike previous campaigns, this time the Guild does not appear to be winning the political or public relations war.
Most mainstream media has focussed on the benefits to consumers of cheaper medicines (especially at a time when cost of living pressures are high) and some journalists have used the opportunity to reveal to readers the extent of the Guild’s influence in federal parliament.
There has been significant pushback against the Guild from other health stakeholder groups, most notably doctors and consumers.
Experts and commentators, including former senior public servant and regular Croakey contributor Charles Maskell-Knight, have also pointed out that the measure makes good policy sense and has previously been recommended, and have called out the Guild’s self-interest.
“As the Pharmacy Guild goes into full hysteria mode, it’s worth remembering that 34 years ago the independent tribunal found the dispensing fee was too high. Since then it has been increased under every Community Pharmacy Agreement,” Maskell-Knight tweeted.
“During that time, the pharmacy business has undergone substantial technological change, which must have lowered costs. It’s really hard to believe that losing one out of two dispensing fees for a limited range of drugs will lead to pharmacy bankruptcies (and plagues of locusts!).”
Complex reasons
There are probably many reasons why this campaign has gone so unexpectedly badly for the Guild so far.
Firstly, unlike some of the more complex regulatory and pricing issues the Guild has previously campaigned on, longer prescriptions and cheaper medicines are simple concepts that the media and general public can easily understand.
Secondly, the vigorous support from both consumer and medical groups makes it hard for the Guild’s “patient safety” argument to have much credibility, particularly when it doesn’t reflect the consumers’ experience. Maskell-Knight told Croakey:
The argument that ‘patient safety will be compromised because pharmacists won’t be reviewing meds every month’ is getting zero cut-through because patients on long-term medication probably can’t remember the last time they spoke to a pharmacist about the medication… and if they are waiting for their script they can see the ‘review’ process, where the pharmacy assistant holds the prescription and the box in front of the pharmacist for ten seconds so the pharmacist can check that the name/drug/dosage align.”
Thirdly, the messaging from the Guild seemed tone deaf to the broader societal context in which this debate is occurring, including the cost-of-living crisis impacting many Australians.
In a housing market where only one percent of available rental properties are affordable for a couple on the aged pension, it’s hard to garner public sympathy for a 28-year-old who uses equity in the property he owns to purchase his “first” pharmacy.
Fourthly, it could have been the claims of Guild President Trent Twomey that pharmacies had already gone bankrupt due to this measure that strained credibility, given they won’t be phased in until later this year.
This claim also flew in the face of other evidence that the pharmacy sector appears to be flourishing.
The Liberal Party’s reported plan to recruit Twomey (who in a previous life was an LNP campaign manager) to run for election also highlights a political dimension.
Most likely it was a combination of the above, along with a bit of that mysterious X-factor which shifts the dial of political and public opinion often without any obvious cause.
A different landscape
But regardless of the reason, it’s clear the Guild is facing a different political and media landscape from the one it has enjoyed over the past three decades.
This is likely to have implications as it approaches negotiations over a possible next Community Pharmacy Agreement (CPA) with government.
The current agreement – the seventh since 1990 – expires on 30 June 2025 and the protracted nature of the negotiations means that both the Guild and Government will already have this on their agendas.
CPAs are a big deal for the pharmacy sector. The current five-year agreement is worth $18.3 billion and sets out the regulatory framework for the current model of community pharmacy, specifically the restrictions on who can own a pharmacy and where they can be located.
Another measure included in all CPAs is a Remuneration Adjustment Agreement under which, if the number of PBS and RPBS medicines dispensed in any one period differs significantly from what was estimated, fees paid to pharmacies are adjusted for the next period. This is to ensure pharmacies have stable income from dispensing PBS and RPBS medicines.
Both the content and regulatory oversight of the CPAs have been criticised by a series of reviews and reports that have found they serve the interests of pharmacy owners over consumers, but thus far the Guild has resisted any major reforms.
The most recent (and also most comprehensive) investigation of the community pharmacy sector was the “King” Review of Pharmacy Remuneration and Regulation, which found that the pharmacy location rules had not established robust competition between independent pharmacies in some locations and also recommended reform of the location rules.
The Guild got off lightly from these potentially significant changes when previous Health Minister Greg Hunt ignored these (and most of the other) recommendations from the Review and proceeded to sign the Guild on for another five-year agreement.
No easy run from Labor
But it’s likely that this time around the Guild won’t get such an easy run from Labor.
One reason is that the political landscape has changed dramatically since the negotiations of the last CPA. There is a much greater presence in federal parliament of Greens and independent parliamentarians who lack any historical allegiance to the Guild and who benefit less than the major parties from the Guild’s political donations.
Teal independent Dr Monique Ryan has already spoken out about her support for reform of political donations laws in the context of the current debate on extended prescribing. The Guild can expect more of the same while she and her cross-bench colleagues have influence in federal parliament.
Another factor is that after last week’s efforts, the media and general public will have more of an insight into the tactics used by Pharmacy Guild to influence government and be less likely to believe future messaging on pharmacy issues.
Fighting back
Despite the missteps last week, there’s no doubt that the Guild will keep fighting back against the extended prescribing measures and its campaign will probably have some impact on the Government.
To some extent this may also be a reaction against the equally disingenuous and unedifying lobbying campaign launched by organised medicine over the push to allow pharmacists a greater role in prescribing and primary care.
However, the Guild has to be careful. A bit of pushback may win it some concessions but push too far and it may get more than it bargains for.
Retail giants, such as Coles and Woolworths, have been angling for years to enter the pharmacy business, but have been prevented from doing so by the ownership restrictions that are supposed to restrict pharmacy ownership to registered pharmacists with a local presence (but in practice allow for absentee pharmacist owners and the creation of large corporate-style chains, like Priceline and Chemist Warehouse).
If the Guild pushes too far in its dissent – for example, by engineering strikes or encouraging pharmacists to refuse to dispense extended scripts – it could be just the excuse the Government needs to start weakening the ownership laws and open up the pharmacy market to greater competition.
There’s enough evidence to back such a move, if the Government wants to go down this route. And it could also gain the support of many younger and employee pharmacists who feel locked out of the market as ownership restrictions drive up the cost of owning a pharmacy.
Revisiting previous reviews
The Government could also use the opportunity to revisit the King review – only four of the review’s 44 recommendations have been implemented and most of those outstanding are still current.
In particular, it should take into account the review’s recommendations on the scope and content of the CPAs, including that the agreements should be limited “purely to an agreement on remuneration to community pharmacy for the dispensing of PBS medicines” and not include funding for other programs, whose value has proven difficult to demonstrate.
At the very least, the Government should ensure that its commitment to re-investing the saved funds from extended prescribing into community pharmacy is not simply a fillip to compensate the sector for the introduction of extended prescribing but is used to deliver programs and services that support pharmacy’s important role in primary healthcare and provide real consumer benefits.
It’s too early to say whether the current debate will translate into more extensive reforms of the pharmacy sector.
Much will depend on the Government’s willingness to take on the Guild on bigger issues, such as ownership and location. That, in turn, will be influenced by how much support the Government receives from consumer, medical and other community groups, for policy and regulatory changes in the public interest.
It’s true that to date the Guild has been a remarkably constant and resilient presence in health politics.
But if we’ve learnt anything from the last federal election it should be how quickly seemingly permanent fixtures on the political stage can be consigned to irrelevance if they fail to evolve along with the changing mores of the community.
Croakey will offer the Guild right-of-reply to this article. We also will publish further perspectives on these issues.
This article was updated on 2 May to include the photos of signs outside and inside a pharmacy.
See here for our archive of stories on pharmacy funding and regulation.
Here is the likely scenario for bankruptcy when Government policy changes. A young pharmacist purchases a Pharmacy funded by a bank that has a number of conditions on the loan. 1) security against other assets ( family home ), 2) a minimum gp as a percent of turnover, 3) maintenance of market value of the business. This sudden change in pharmacy funding even before the relevant bills are passed by parliament undermines points 2 and 3 to the bank calls in its loan, resulting in a bankrupt homeless Pharmacist. And yes, all Pharmacy sales and valuations are effectively frozen pending the financial ramifications of this seemingly minor change. I suspect no-one will care anyway, not for now at least.
For context I’m an employee pharmacist.
It’s pretty disheartening to hear pharmacists called “ticket clippers” and “wannabe health professionals” by senators. Plus a chorus of doctors and the AMA piling on – while they increasingly refuse to bulkbill because the MBS reimbursements are too low.
We just had a pandemic where community pharmacies stayed open when GPs and politicians had the luxury of telehealth and WFH. Where community pharmacies did the heavy lifting on Covid vaccinations, delivering to isolating patients and copping flak for the changing policies for free RATs, mandatory masks, vaccination and isolation rules.
I guess it’s harder to make a purely business case for cuts without denigrating pharmacists when Labor is also keeping the stage 3 tax cuts.
This is an ill informed article. The policy is flawed and the full effects will not be seen until 2 years after it is implemented.
How about the government address people’s biggest stressors. Rent and mortgage costs instead of attacking the pharmacy industry. Services such as deliveries and webster packs will no longer be free once the changes come into affect. Job losses will occur and Pharmacy opening hours will be reduced as the pharmacy tries to claw back losses.