Call for Abstracts – closing 8 July 2019
The Review of Pharmacy Remuneration and Regulation 2 July, 2019
What will we cover? Scope Background History Analysis Recommendations Lessons and Questions The pharmacy review 3
Scope
Scope The Panel was asked to consider: • pharmacy remuneration for dispensing; • regulation; • wholesaling, logistics and distribution arrangements; • accountability and regulation; and • consumer experience. Scope 5
Background on community pharmacy
The PBS supply chain Background on Community Pharmacy 7
Pharmacy ownership and ‘groups’ Background on Community Pharmacy 8
Community pharmacy - What is a dispense Background on Community Pharmacy 9
Pharmacy remuneration – Background on Community Pharmacy 10
Pharmacy remuneration – 40mg Atorvastatin (May 2017) Background on Community Pharmacy 11
A brief history on remuneration for dispensing
A brief history on remuneration for dispensing • The 1980s – a time of free entry and government set remuneration (and state ownership rules) • 5609 pharmacies (we have about 5500 today) • One pharmacy for every 3000 people (about 1:4300 today) • Increasing government cost largely driven by two-part remuneration • The 1988 Inquiry • Need to reform remuneration • Too many inefficient pharmacies so need amalgamations/closures History 13
A brief history on remuneration for dispensing • The 1990s • First CPA with Pharmacy Guild to get agreement on remuneration and agreement on closures and amalgamation • Location rules necessarily followed – any new pharmacy had to be at least 5km away from an existing pharmacy • CPA covers dispensing, programs and wholesaling History 14
A brief history on remuneration for dispensing • The 2000s • Location rules ‘whack a mole’ starts • Rules to move an existing pharmacy and rules for medical centres and shopping centres • Rural pharmacy subsidy starts • At end of decade – price disclosure rules History 15
Price disclosure savings ($m) History 16
A brief history on remuneration for dispensing • The 2010s • Location rules ‘whack a mole’ continues • Can move pharmacy up to 1km • Set up new pharmacy if ‘demonstrable need’. • Significant jump in remuneration per script • Price disclosure bites History 17
Average Pharmacy remuneration per script History 18
Analysis
The money What is appropriate remuneration for dispensing? • $11.50 per script but not based on any economic analysis of costs • The government does not have the data to determine the cost of efficient dispensing • But huge differences in pharmacies • The 70:30 rule except where it is 30:70 • Price disclosure will kill some pharmacies (but always a buyer for the license!) • Best information to the panel suggests that an efficient pharmacy needs $8-$10 per script on a conservative basis. Analysis 20
Fiscal savings from flat $10 dispensing fee (based on 2016 data) Year Fiscal cost saving 2015-16 $277,693,429 2016-17 $290,328480 2017-18 $296,564,010 2018-19 $303,674,132 2019-20 $310,954,719 Total $1,479,214,770 Analysis 21
The customer Is the customer getting what the government pays for? • Service highly variable and customers ‘voting with feet’ • What you can get differs between pharmacies • No ‘modern’ interface between GP – community pharmacy – hospital • Huge price variation • Where you live matters. • Community pharmacy is “a shop”. Analysis 22
Price differences, general consumers (Sept 2016) PBS item Medicine name No. of scripts Average price paid Standard code ('000s) deviation 01215Y PARACETAMOL + 86 $11.41 $4.78 CODEINE 01394J LEVONORGESTREL + 101 $16.08 $5.24 Notes: ETHINYLOESTRADIOL Top 10 medicines ranked by script volume. 01889K AMOXYCILLIN 176 $12.01 $4.88 Only community pharmacies included. 03119E CEPHALEXIN 158 $12.66 $4.95 Excludes any price differences due to special patient contributions, therapeutic group premiums 08008L PANTOPRAZOLE 99 $11.81 $4.99 and brand premiums. 08215J ATORVASTATIN 74 $13.06 $5.99 Excludes chemotherapy medicines. 08254K AMOXYCILLIN + 186 $13.66 $5.45 CLAVULANIC ACID 08600P ESOMEPRAZOLE 112 $21.00 $6.30 08700X ESCITALOPRAM 74 $12.46 $5.80 09043Y ROSUVASTATIN 202 $17.22 $6.46 Analysis 23
Proportion of $1 discount scripts dispensed by PhARIA, 1 Jan – 30 June 2016 Analysis 24
Location rules and remuneration There is no credible economic case for ‘excessive clustering’ of community pharmacies once appropriate remuneration is established. Other factors: • Supermarket co-location • Ability of incumbent to take new licenses Analysis 25
Recommendations
Minimum pharmacy services: A minimum set of services that all community pharmacies must provide in return for acting as government agents and receiving (partial) government payment for those services – including dispensing PBS medicines. No pricing discretion for PBS medicines Some limits to complementary medicines in community pharmacy Recommendations 27
Minimum pharmacy services: A minimum set of services that all community pharmacies must provide in return for acting as government agents and receiving (partial) government payment for those services – including dispensing PBS medicines. No pricing discretion for PBS medicines Some limits to complementary medicines in community pharmacy Recommendations 28
Electronic prescriptions: Participation required for all prescribers and dispensers. Linked to a universal health record and medicine record for the patient. Tied to automatic safety net calculations and electronic medicines information Recommendations 29
Electronic prescriptions: Participation required for all prescribers and dispensers. Linked to a universal health record and medicine record for the patient. Tied to automatic safety net calculations and electronic medicines information Recommendations 30
Pharmacy information: Data to underpin remuneration: Step 1 – Framework for remuneration (*) • Best practice benchmark • Incremental cost (LRAIC) Step 2 – What information Step 3 – Get the information Step 4 – Set (flat) level of remuneration for dispensing Principle of the same government payment for the same service to apply across health professionals. Recommendations 31
Pharmacy information: Data to underpin remuneration: Step 1 – Framework for remuneration (*) • Best practice benchmark • Incremental cost (LRAIC) Step 2 – What information Step 3 – Get the information Step 4 – Set (flat) level of remuneration for dispensing Principle of the same government payment for the same service to apply across health professionals. Recommendations 32
Location rules: Gazzumped by government • Recommend someone else look at the rules and ensure they are based on “equitable and affordable access to Medicines” • ACCC to act on local ‘monopolies’ using SLC test with Divestiture power Recommendations 33
Location rules: Gazzumped by government • Recommend someone else look at the rules and ensure they are based on “equitable and affordable access to Medicines” • ACCC to act on local ‘monopolies’ using SLC test with Divestiture power Recommendations 34
Future Community Pharmacy agreements: Just remuneration for dispensing • Not consider wholesaling • Not include ‘programs’ • Representation by the Guild, the PSA, and the CHF A range of recommendations on existing and new programs including DAAs, home medicine reviews, and residential aged care. Recommendations 35
Future Community Pharmacy agreements: Just remuneration for dispensing • Not consider wholesaling • Not include ‘programs’ • Representation by the Guild, the PSA, and the CHF A range of recommendations on existing and new programs including DAAs, home medicine reviews, and residential aged care. Recommendations 36
Other: Wholesaling: • Further work on supply chain • Cap of $700-$1000 on wholesale cost to pharmacy Support for indigenous Australians follows the individual. Indigenous health services can own and operate pharmacies Trial of machine dispensing One minimum standard and payment for chemotherapy compounding Recommendations 37
Other: Wholesaling: • Further work on supply chain • Cap of $700-$1000 on wholesale cost to pharmacy (*) Support for indigenous Australians follows the individual (*) Indigenous health services can own and operate pharmacies Trial of machine dispensing (-) One minimum standard and payment for chemotherapy compounding (*) Accepted (with caveats) (-) Rejected Recommendations 38
Lessons and Questions 3 July, 2019
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