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Pharmacy review: where is it headed?

If you’re a bit hazy on how efficiently and cost-effectively pharmaceutical products are funded and distributed in Australia, you’re not alone. As health policy expert Dr Lesley Russell explains below, the details are “complicated and arcane”.

For the past seven months or so, the federal government has been conducting a review of pharmacy remuneration and regulation, and earlier this week the independent panel responsible for the review released its first report – a discussion paper that poses 132 questions to be addressed via formal consultations and submissions over the next two months.

Consumer perspectives, in particular, are sought. So read on for an opportunity to have your say in how we can get more for our multi billion dollar investment in pharmaceutical products and services.

Lesley Russell writes:

The 6th Community Pharmacy Agreement (CPA) required a review of pharmacy remuneration and regulation. Key drivers for this were the ongoing debates about pharmacy location rules, pharmacy ownership and whether pharmacies should be allowed within supermarkets. These issues were also addressed in the National Commission of Audit and the Harper Competition Policy Review.

The Pharmacy review, chaired by Professor Stephen King, got underway in November 2015. Now, after a series of meetings with key stakeholders, and a delay caused by the federal election, a discussion paper has been released.  The final report is due by March 2017.

The paper poses 132 questions for which the panel is seeking responses. The preface to the paper states that this is for what is “primarily a consumer-focused review that aims to identify which services and programs that consumers value from community pharmacy” and that the review panel will also consider “any future arrangements in the context of the long term sustainability and equitable distribution of the PBS as a government funded “community resource””.

It is interesting that these broad foci have emerged from the much more specific requirements of the terms of reference. The patient focus is heartening; there are many interpretations of the second statement – not all of them benign – especially given the ideologies of the Coalition Government.

This is a summary of the key issues in the report, with a focus on those that relate to consumers and primary care.

The Community Pharmacy Agreement

The most salient point to emerge is that 30% of total PBS expenditure (currently $11.5 billion annually) goes to community pharmacy. There are also additional funds (around $1.2 billion over the life of the CPA) provided for pharmacy support programs. On this basis alone, regular scrutiny to ensure efficiency and value is required.

However public transparency about how the $18.9 billion in the 6th CPA is spent is diminished, as dispensing fees and various pharmacy mark-ups and add-ons (once separately broken out) are now broadbanded. (A detailed description of the 6th CPA is provided in my 2015-16 budget analysis.)

The discussion paper provides some specific breakdowns of the costs and returns to the manufacturers, government, wholesalers, pharmacists and patients that are enlightening.

Two examples:

  • A specific brand name medicine has a dispensed price to the PBS (ie the government) of $55.32 (made up of $41.76 paid to the manufacturer, $3.14 paid to the wholesaler and $10.42 in dispensing fees paid to the pharmacist). The pharmacist may also receive an electronic prescribing fee ($0.15) and a $1.72 incentive to encourage generics use without a co-payment. Of the $55.32 cost, the Government will recoup $38.39 from a general patient ($6.20 when they hit the PBS safety net) or $6.20 from a concession card holder ($0 when they hit the safety net).

 

  • The pricing of generic medicines is more complicated. A specific generic medicine has a dispensed price of $15.71 (made up of $4.92 paid to the manufacturer, $0.37 paid to the wholesaler and $10.42 in dispensing fees). Also potentially payable to pharmacist is the $0.15 electronic prescribing fee and the $1.72 incentive to encourage generics use without co-payment. Of this Government will recoup $15.71 from a general patient, $6.20 from a concession card holder or general patient who has hit the safety net, or $0 from a concession card holder who has hit the safety net. However, the pharmacist may charge a general patient up to $5.50 more (a safety net recording fee of $1.17 and an allowable extra fee of up to $4.33).

In addition, for both brand name and generics, a pharmacist may choose to discount the patient’s co-payment by $1. It’s not surprising that patients are confused over variations in script costs! And small wonder that the discussion paper asks if the CPA process is the best way to organise medicine distribution and remuneration. It also asks those who think it is not, to provide information about preferable approaches.

Pharmacists’ roles in primary care

A key issue for the discussion paper is whether the skills, knowledge and expertise of pharmacists are under-utilised. Underpinning this is the more fundamental issue of what innovation in community pharmacy looks like.

There are substantial government funds behind this initiative

  • $613 million to continue a range of professional services and programs (such as MedsCheck and Home Medication Reviews) aimed at improving medication management and health outcomes
  • $50 million for the new Pharmacy Trial Program by extending the role of pharmacists in the delivery of primary care services (see discussion paper)
  • $600 million to support recommendations by a health technology assessment committee about which new programs should continue after the trials have concluded, and the continuation of existing programs.

The discussion paper recognises that an expanded role for pharmacy in primary care requires that there are clear answers to the questions of (1) What are the professional programs and services that pharmacists should or could provide? and (2) What pharmacy services should be fully or partially government funded and what should be left to the marketplace?

The review panel has clearly heard differing opinions on this, including the fact that some pharmacists may be unable or unwilling to take up expanded primary care roles.

The AMA, always keen to protect doctors’ turf but also recognising the essential value of pharmacy in primary care, has already released its own position paper on this issue. The AMA argues that the pharmacist in a primary care role must be non-dispensing. However, this is not put forward as a requirement in the pharmacy review discussion paper and indeed there is a solid case to be made for co-location of dispensing services and pharmaceutical advice within the primary care practice.

In a different but related set of questions, the discussion paper also asks about the role of hospital pharmacies, both public and private.  Should they be able / required to provide broader community services beyond just dispensing medicines to hospital patients? Interestingly, I found no mention in the discussion paper of the potential role of pharmacists in a patient-centred medical home model of care.

Pharmacy location rules

This issue has been a hot political potato for years, and it is noticeable that the discussion paper tiptoes around it – despite the fact that arguably it is the main reason for the pharmacy review, and despite the Coalition Government’s penchant for competition in other healthcare areas.

I was intrigued that the discussion paper seems to link location rules with ownership rules (pharmacies must be owned by a registered pharmacist). However it does ask the key question here: should the current restriction on pharmacies within supermarkets be lifted?

It does ask if the location rules should be applied differently in urban and rural areas and if pharmacies should pay (monetarily and / or with additional service requirements) to break the location rules. (So much for competition!).

Pharmacy services for Aboriginal and Torres Strait Islander people

The discussion paper takes a hard look at the current mechanisms for delivering prescription medicines and pharmaceutical services to Indigenous Australians, and specifically at the artificial divide between services provided in remote areas (through the s100 Remote Area Aboriginal Health Service) and those in rural and urban areas (Quality Use of Medicines Maximised for Aboriginal and Torres Strait Islander people (QUMAX) and the Closing the Gap Indigenous Chronic Disease Copayment measure).

The problem is that while the s100 program provides prescription medicines, the Aboriginal Health Services (AHSs) are not provided with specific funds to employ a pharmacist and so the medicines are not being used as effectively as possible.

This raises obvious questions of how to provide QUMAX type services in remote Australia: should the AHSs be allowed to operate a pharmacy business (this is currently only allowed in the Northern Territory)? Should pharmacists be able to claim a fee for QUMAX activities in an AHS?

There is also a need for greater cultural sensitivity in the provision of pharmacy services, especially those like Home Medication Reviews.

The consumer experience

It is really important that the voices of consumers and patients are heard through the consultation process. The basic issues are around what consumers expect from pharmacy services, what pharmacy is required to offer, and how well and widely these services are delivered.

The review panel recognises that many people are not aware of the full range of pharmacy services and program that are available to them and how to seek redress if these are not provided.

It is currently difficult to know which pharmacies provide specialist programs such as treatment for opioid dependency, dispensing of hepatitis C drugs and provision of fit packs. People are also confused about variations in prices and co-payments, and greater transparency is needed about pharmacy fees and charges.

Again, there are basic questions to be answered: What do consumers expect for the PBS co-payment? What should a dispensing service encompass and should this be different for initial and repeat scripts? What are the issues around the provision and availability of after-hours pharmacy services? Which community pharmacy models are preferred?

The media reports on this discussion paper have particularly highlighted the potential conflicts of interest when pharmacies offer alternative health products, herbal remedies and vitamins that lack an evidence base for their safety and effectiveness.

The paper says this: “The panel has heard that some consumers are concerned that pharmacists may compromise on the level of professional advice provided to patients on the quality use of medicines and feel financial pressure to ‘up-sell’ to consumers, for example by recommending medicines or products that may not be necessary for the patient. It was also claimed that many complementary products do not have evidence-based health benefits and as such, the sale of these products in a pharmacy setting may misinform consumers of their ­effectiveness and undermine the professional integrity of community pharmacists.”

The suggestion is that any expansion of pharmacy’s role in primary care and aged care will require a focus on evidence-based products and services.

This focus can be strengthened through the appropriate codes of conduct and registration requirements. The Pharmaceutical Society of Australia has begun a detailed review of the Professional Practice Standards and the Code of Ethics for pharmacists that will run over next 12 months.

Conclusion

I have worked on pharmaceutical issues for many years, but it is still for me an incredibly complicated and arcane part of health policy, as highlighted by this paper. It’s an area that must be made more accessible to all stakeholders, especially patients and consumers.

Despite its comprehensiveness, there are some issues which are obviously missing from this paper: there is no discussion of the pharmacist’s role in managing patients’ claims for the PBS safety net; there is nothing about shortages in the supply of some medicines (especially older injectables); and there is just a brief mention of the lack of adequate funds for Home Medication Reviews.

Finally, at a time when bean counters and policy wonks alike are concerned about value for healthcare dollars, it is shocking to realise that there are very limited data to link pharmacy practice and the dispensing mechanisms for prescription medicines to patient health outcomes. Billions of dollars are spent – we need to know what is delivered in return. We must hope that the final report from this review and Government action to implement the recommendations will achieve this end.

*Dr Lesley Russell is an Adjunct Associate Professor at the Menzies Centre for Health Policy, University of Sydney. 

Comments 1

  1. dred says:

    The location rules for Pharmacies are just open theft from the public. Stopping new pharmacies from opening within 1.5km on an existing just guarantees monopoly profits for the greedy pharmacy owners- many of whom haven’t bothered to fill a prescription in decades(too busy counting the cash). Stop the rort, stop the location rules, let new pharmacies open up.

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