In October 2017, the Australian Government tabled a bill to repeal the sunset provisions of the National Health Act 1953 (Cth) (“National Health Act”) which would, if not repealed, cease the provisions of the National Health Act which support the functions and operations of the Australian Community Pharmacy Authority (“ACPA”) and the Pharmacy Location Rules (“Rules”) on 30 June 2020.

Who is the ACPA?

The ACPA is an independent statutory body established under Division 4B of the National Health Act.

What does the ACPA do?

Pharmacists must apply to Medicare for approval to supply pharmaceutical benefits at particular premises. Subject to a number of exceptions, once received by the Secretary, those applications are then referred to the ACPA for recommendation.

The ACPA meets on a monthly basis to assess applications and to make recommendations as to whether to approve or reject an application made by a pharmacist to supply pharmaceutical benefits scheme (“PBS”) subsidised medicines in accordance with section 90 of the National Health Act.

The ACPA makes recommendations to the Secretary (delegated officers within the Department of Human Services) as to whether or not an application should be approved. The ACPA has the ability to also make recommendations as to the conditions (if any) to which the approval should be subject. Notwithstanding this, the Secretary may refuse to grant an approval even if the grant has been recommended by the ACPA.

The establishment, functions and operation of the ACPA are due to cease on 30 June 2020.

What are the Pharmacy Location Rules?

The Rules relate to the establishment of a new pharmacy and the relocation of an existing pharmacy which has approval to provide PBS medicines under section 90 of the National Health Act.

The existing Rules were agreed by the Department of Health and the Pharmacy Guild of Australia (“Guild”) in 2011 (with minor amendments incorporated for applications made on or after 10 November 2015), and were made under section 99L of the National Health Act. The Rules are a fundamental component of the Sixth Community Pharmacy Agreement (“Sixth Agreement”) between the Guild and the Australian Government. The Sixth Agreement commenced on 1 July 2015 and will terminate on 30 June 2020.

The ACPA is required to comply with the requirements of the Rules in making its recommendations. The Rules therefore set out location-based criteria which the ACPA must be satisfied are met before the ACPA can make a recommendation for the approval of a pharmacist.

What is the rationale for the Pharmacy Location Rules?

The Rules were first introduced in 1990 under the First Community Pharmacy Agreement (“First Agreement”). As a result of the First Agreement, the number of pharmacies nationally was reduced from approximately 5,600 to approximately 5,000.[1]

Prior to the introduction of the Rules, the Australian Government would subsidise marginal pharmacies that were not as commercially efficient.[2] The initiative sought to restructure community pharmacies by providing financial assistance, jointly with the Guild, to pharmacies that wished to close or amalgamate, and by restricting the opening of new pharmacies in order to reduce the Government subsidies.[3]

Since their introduction, there has been fierce debate over the existence of the Rules. In 2015, the Minister for Health stated that maintaining the Rules ensures there is a suitable spread of pharmacies within the community, particularly in rural and remote areas.[4] The Australian Government has supported the continuation of the Rules to ensure the viability of community pharmacies.[5] However, those who support the abolishment or revision of the Rules suggest that the Rules inhibit competition within the pharmacy community.[6]

In 2015, the Minister for Health explained that a review of the Rules would be taking place and that an extension of the expiry date within the sunset clause would allow for the Rules to continue while a review took place.[7]

Repeal of sunset dates

Within the 2017-18 budget papers, the Australian Government announced that they would ensure the ongoing legislative basis for the Rules, which would provide pharmacy owners with ongoing confidence that approval to supply pharmaceutical benefits at particular premises will continue to be regulated.[8]

The Government’s announcement has been since supported by the tabling of the National Health Amendment (Pharmaceutical Benefits – Budget and Other Measures) Bill 2017 (“Bill”) in October 2017. The Bill seeks to repeal all sunset provisions which apply to the operation of Division 4B of the National Health Act (regarding the establishment and function of the ACPA and Rules), and which require certain applications under section 90 of the National Health Act to be referred to the ACPA.