Review fundamentally flawed


Date: 2 August 2017

The Pharmacy Remuneration and Regulation Review (the King Review) has been hijacked by a combination of ideology and economic theorising leading to conclusions that would dismantle, if not destroy, the community pharmacy model.

Its flawed approach would force the closure of an estimated 1,700 community pharmacies with massive major losses of jobs, and an irreversible corporatisation and commoditisation of medicines-related care.  

Such a radical prescription for community pharmacy is totally unwarranted.  The evidence before the Review overwhelmingly confirmed the success of and high levels of public support for the community pharmacy model, which is the most fiscally sustainable part of the entire health system.

This Review should have been an opportunity to identify practical ways to build upon this tried and tested community pharmacy model, focusing on the potential to utilise this privately financed health infrastructure and the highly trained health professionals who work in it to deliver better and more cost-effective health outcomes for all Australians.

Instead the Review’s approaches would destroy value and has been highly selective in seeking to substantiate its seemingly pre-determined dispositions and views in the key areas of dispensing, the Location Rules and the negotiation of future community pharmacy agreements.

The Guild has been concerned with this Review since the former Minister appointed competition economist Professor Stephen King as its head, despite his public statements supporting the removal of the pharmacy Location Rules and ownership restrictions after the release of the Harper Competition Policy Review.

From the outset Professor King has been provocative, creating unnecessary uncertainty and angst among community pharmacy owners and their staff.  The Review has continually sought to extend its remit outside the intent outlined in the Sixth Community Pharmacy Agreement, which was to consider the Commonwealth’s role in funding and regulating community pharmacies.

Its commissioning of consultancies has raised serious conflict of interest concerns, including its decision to continue retaining Deloitte Access Economics after it became known that this firm had produced a major report co-authored by Professor Ian Harper advocating for the removal of the pharmacy Location Rules and ownership restrictions, which was part of the Chemist Warehouse submission to the Review.

Its approach to the collection of pharmacy financial data has also been seriously flawed, with multiple Freedom of Information requests confirming the Review sought access to pharmacy tax return data.

From start to finish, the Review has missed deadlines. It publicly committed to publishing its consultancy reports last December but failed to do so. The Review Panel refused to engage with the Guild on any aspect of our 200-page plus submission in response to the Discussion Paper.

An FOI request has also highlighted the ongoing behind-the-scenes involvement of the central agencies (Treasury, Finance and PM&C) in this so-called independent Review, including an intervention by the Department of Finance asking that the Review curtail its deliberations pertaining to the future role of pharmacists for budgetary reasons.

After thoroughly analysing the Interim Report and receiving detailed economic analysis from eminent Professors Ergas and Pincus, the Guild has reached the conclusion that the Review is so fundamentally flawed and inherently damaging that it cannot and should not be relied upon by government as a credible input on the key issues of dispensing remuneration, pharmacy Location Rules, the medicines supply chain or future community pharmacy agreements.

However the Guild is determined that this opportunity is not lost and is committed to working with government and all relevant stakeholders in ensuring that a viable community pharmacy network continues to deliver the best possible health outcomes for patients into the future, working in partnership with the profession and collaborating and integrating with the broader health sector.

The Guild’s submission to the Review’s Interim Report and the Executive Summary can be read here.

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Page last updated 30 January 2018