Call for Abstracts closing 8 July 2019 The Review of Pharmacy - - PowerPoint PPT Presentation

Call for Abstracts – closing 8 July 2019

The Review of Pharmacy Remuneration and Regulation

2 July, 2019

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What will we cover? Scope Background History Analysis Recommendations Lessons and Questions

The pharmacy review

Scope

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Scope

Scope

The Panel was asked to consider:

• pharmacy remuneration for

dispensing;

• regulation;
• wholesaling, logistics and

distribution arrangements;

• accountability and regulation; and
• consumer experience.

Background on community pharmacy

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The PBS supply chain

Background on Community Pharmacy

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Pharmacy ownership and ‘groups’

Background on Community Pharmacy

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Community pharmacy - What is a dispense

Background on Community Pharmacy

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Pharmacy remuneration –

Background on Community Pharmacy

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Pharmacy remuneration – 40mg Atorvastatin (May 2017)

Background on Community Pharmacy

A brief history on remuneration for dispensing

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A brief history on remuneration for dispensing

History

• The 1980s – a time of free entry and

government set remuneration (and state

• wnership 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

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A brief history on remuneration for dispensing

History

• The 1990s
• First CPA with Pharmacy Guild to get

agreement on remuneration and agreement

• n 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

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A brief history on remuneration for dispensing

History

• 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

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Price disclosure savings ($m)

History

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A brief history on remuneration for dispensing

History

• 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

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Average Pharmacy remuneration per script

History

Analysis

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The money

Analysis

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.

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Fiscal savings from flat $10 dispensing fee (based on 2016 data)

Analysis

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

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The customer

Analysis

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”.

Notes: Top 10 medicines ranked by script volume. Only community pharmacies included. Excludes any price differences due to special patient contributions, therapeutic group premiums and brand premiums. Excludes chemotherapy medicines.

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Price differences, general consumers (Sept 2016)

Analysis

PBS item code Medicine name

• No. of scripts

('000s) Average price paid Standard deviation 01215Y PARACETAMOL + CODEINE 86 $11.41 $4.78 01394J LEVONORGESTREL + ETHINYLOESTRADIOL 101 $16.08 $5.24 01889K AMOXYCILLIN 176 $12.01 $4.88 03119E CEPHALEXIN 158 $12.66 $4.95 08008L PANTOPRAZOLE 99 $11.81 $4.99 08215J ATORVASTATIN 74 $13.06 $5.99 08254K AMOXYCILLIN + CLAVULANIC ACID 186 $13.66 $5.45 08600P ESOMEPRAZOLE 112 $21.00 $6.30 08700X ESCITALOPRAM 74 $12.46 $5.80 09043Y ROSUVASTATIN 202 $17.22 $6.46

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Proportion of $1 discount scripts dispensed by PhARIA, 1 Jan – 30 June 2016

Analysis

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Location rules and remuneration

Analysis

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

Recommendations

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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 (*) Accepted (with caveats) (-) Rejected

Lessons and Questions

3 July, 2019