Patients 'missing out' on cheaper medicines in Pharmacy Guild dispensing agreements

Pharmacies in Australia are funded and regulated through Community Pharmacy Agreements negotiated between the federal government and the Guild.

A new report from the Grattan Institute delved into the so-called “backroom deals” that underpin these agreements and the fees pharmacists receive to dispense PBS medications, warning there are signs costs are too high.

The Guild negotiates funding and policy directly with the government, with no public evidence or data available to justify the decisions, according to the report.

Over the last five years, the Guild has donated $2.5 million to political parties, making it the largest donor from the health-care sector, the Grattan Institute said in a statement.

“Bad governance has led to bad deals – unless you own a pharmacy. Profits have surged, while patients miss out on cheaper medicines and choices about where to get them, and taxpayers pay too much,” the report said.

“Dispensing fees are probably too high, and some payments aren’t justified at all. If the number of scripts falls below a predicted level, government has to pay up anyway, as if the predicted level was met.”

When a PBS medication is dispensed, the pharmacy receives fees to cover labour, administration and handling. The patient pays the maximum fee on the PBS, and the government pays the rest.

But funding for scripts has continued to increase even as the labour involved has decreased through the use of e-prescriptions and automation, and Pharmacy Guild data suggests member profits have more than doubled in real terms over the past decade.

The Grattan Institute found dispensing fees were not based on the cost of dispensing and here was no way to track to true cost.

It made a number of recommendations to address these concerns, including that negotiations on fees be determined by the Independent Health and Aged Care Pricing Authority, based on real cost data.

“Dispensing fees should be streamlined and reset. Unjustified fees should be scrapped. Fees should be set independently, based on cost not bargaining.”

Simon Blacker, National Vice President of the Guild, said the report missed a “fundamental reality” that these measures exist to ensure patients have equitable access to medicines and pharmacy services regardless of where they live.

“Removing these patient protections would not create more access to care – it would risk concentrating pharmacies in the most commercially attractive locations while leaving vulnerable communities with fewer healthcare options," he said.

“Medicines are not ordinary retail products, and community pharmacies should continue to operate as healthcare providers first and foremost. Healthcare decisions must remain focused on patient needs and appropriate clinical governance - not shareholder returns."

He refuted claims that the Guild was not focused on affordable medicines, pointing towards its campaign for the government to lower the PBS co-payment.

He said the funding agreements reflect the broad range of services community pharmacies provide, including medication management, vaccination programs and chronic disease support

RACGP President Dr Michael Wright welcomed the report, saying lobbyist-led healthcare cannot be allowed in Australia.

“This is not about limiting access to care – it is about ensuring access to safe, evidence-based and connected care. Australians deserve a healthcare system that delivers the best quality care for patients and the best possible value for taxpayers,” he said.

The GP-pharmacist model

There is ongoing debate over whether pharmacists should be able to prescribe for certain conditions.

The Grattan Institute weighed in on the debate, suggesting it's not as black and white as is being argued.

It acknowledged some evidence for pharmacists to prescribe for conditions such as uncomplicated urinary tract infections but said there was weak evidence on value for money in allowing pharmacists to prescribe more.

“Significant investment and reform is focused on urgent care centres and multidisciplinary general practice, including pharmacists working in general practices. If they prove cost-effective, the case for providing overlapping services in community pharmacies will get weaker.”

It’s solution: invest $80 million in federal funding to support pharmacists working in GP clinics and Aboriginal Community Controlled Health Organisations.

“Instead of dispensing, they work in general practice alongside GPs to provide medicine reviews and patient education.”

Such a model already exists in the United Kingdom and Canada.

It’s a solution the RACGP has signalled support for in the past, having called for a multidisciplinary approach to care to avoid segmenting parts of the primary healthcare system.

In a response to the report, the College said this model best supports continuity of care.

“The best patient outcomes occur when healthcare professionals work together as part of a coordinated team. Integrating pharmacists within general practice supports medication safety, improves communication and helps patients receive more coordinated care," Dr Wright said.