Support for community pharmacy in Budget 2019

Date: 2 April 2019

The Pharmacy Guild welcomes confirmation that the Budget will provide $245 million over five years from 2018-19 to improve consumer access to medicines and support community pharmacies.

This includes:

  • $215 million over three years from 2020-21 to provide additional remuneration to community pharmacies through increased Administration, Handling and Infrastructure (AHI) fees on all Pharmaceutical Benefits Scheme (PBS) scripts, which has been partially funded by reallocating funding from Sixth Community Pharmacy Agreement professional programs. 
  • $15 million over three years from 2020-21 for additional Community Service Obligation payments to pharmacy wholesalers. 
  • $15 million in 2018-19 to promote quality use of medicines by patients through medication management programs in community pharmacy.
  • aligning public and private hospital pharmacy pricing with the community pharmacy pricing arrangements from 1 July 2019. 

In addition, as has already been announced and implemented last month, the Government will improve cash flows for community pharmacies by reducing the period of time that the Government takes to process claims against the PBS from 9-16 days to 2-9 days, which has no impact on the Government’s fiscal balance over the forward estimates but will have a $213 million impact on the Government’s underlying cash this financial year. 

The National President of the Pharmacy Guild, George Tambassis, welcomed the measures, saying they would assist community pharmacy small businesses to continue serving their patients and employing staff.

The Guild also welcomes a Budget decision to introduce an Australian-first PBS-subsidised take-home program for naloxone to help reduce overdose deaths from opioid abuse. This is a $7.2 million commitment which we strongly support.

Small business boost with instant tax write-off

The Pharmacy Guild welcomes the taxation measures to assist small business which have been announced in the Budget.

The measures include:

  • Increasing the instant asset write-off threshold to $30,000 and expanding access to medium-sized businesses with an annual turnover of less than $50 million (up from $10 million) to help them reinvest in their business, employ more workers and grow. 
  • Fast-tracking the company tax rate cut to 25 per cent for small and medium-sized companies with an annual turnover of less than $50 million.
  • Increases to the unincorporated small business tax discount rate (up from 8 per cent to 16 per cent by 2021-22, with a cap of $1,000).

The lift in the instant asset write-off threshold to $30,000 will apply from tonight and be in place until 30 June 2020, benefitting an estimated 3.4 million businesses. The threshold applies on a per asset basis so eligible businesses can instantly write-off multiple assets.

Pharmacy Guild National President George Tambassis said community pharmacies were vital small businesses because of their role in the health system, their accessibility for patients, and because they are significant local employers.

“We welcome this recognition of the need for small businesses to be able to invest in the future for the benefit of the patients they serve and the staff they employ,” Mr Tambassis said.

New listings feature in complex PBS picture

This Budget includes – and the Pharmacy Guild welcomes - $331 million for new and amended listings on the PBS, including life changing medicines to treat lung, bladder, kidney and skin cancer as well as leukaemia. Patients will be able to access these medicines for the general patient co-payment of $40.30 per script, or $6.50 with a concession card.

Health Minister Greg Hunt said: “The Liberal National Government has provisioned $40 billion in the forward estimates for life-saving and life-changing medicines. We are averaging 31 new or amended listings per month – approximately one per day.”

The broader picture of the level of funding for the Pharmaceutical Benefits Scheme is complicated by recent administrative changes which significantly reduce the headline spending figure through the gradual removal of manufacturer rebates which have long artificially pumped up the apparent cost of the PBS. 

For example, the headline Budget figure for PBS spending this financial year is $12.7 billion. By 2022-23 it is projected to be $10.4 billion. However, the Government is again at pains to stress this year that the overall level of investment in the PBS has not decreased – although that is not the same as saying there has been any real growth (i.e. growth above the inflation rate).

This is how the Budget papers describe the PBS spend: “Expenses for the pharmaceutical benefits and services…(but not the Government’s overall investment in pharmaceutical benefits) is expected to decrease by 18.6 per cent in real terms over the period 2019-20 to 2022-23. This largely reflects the improved payments administration announced in the 2018-19 Budget which reduces PBS revenues and expenses by a corresponding amount for high-cost medicines with special pricing arrangements. There will be no reduction in the Government’s overall investment in the PBS as a result of these changes.”

Under the 2018-19 Budget measure to improve administration arrangements, the Government will continue to pay the negotiated price for medicines. However, the payment process will change and the Government will stop paying higher prices for certain medicines and at the same time stop receiving negotiated discounts through revenue rebates. This will reduce the PBS revenue received by the Government, with a corresponding reduction in PBS expenses. 

According to the Budget papers this “will not change the Government’s overall growing investment in the PBS.”

Leaving aside the complexity of “improved administration arrangements,” the fact remains that the PBS is again shown to be the most fiscally sustainable part of health spending in the Budget – largely because of a decade of contributions by the entire pharmaceutical sector, including community pharmacy, to the very significant savings that have been imposed through PBS reforms.

Improving aged care medicine use

The Pharmacy Guild welcomes the Government’s support of a Canberra trial to partner with community pharmacies in improving quality use of medicines in residential aged care facilities.

The Government recognises that better use of medicines in aged care, including the use of psychotropic medicines, will directly improve the quality of life, care and safety of many senior Australians living in residential aged care.

The Guild believes this trial and its outcomes will build on the extensive contribution already being made by community pharmacists all over Australia, as part of the collaborative teams that serve the needs of people in residential aged care.

Contact: The Guild
Phone: 13GUILD

Page last updated on: 15 June 2021