Pharmacy and Government Arrangements - Fourth Community Pharmacy Agreement
The Fourth Community Pharmacy Agreement between the Commonwealth Government and the Pharmacy Guild of Australia
Overview | For Consumers | Pharmacist Remuneration | Community Service Obligation for Pharmaceutical Wholesalers | Pharmacy Location | Professional Pharmacy Programs and Services | Fourth Community Pharmacy Agreement Reviews | Administration and Implementation
The Fourth Community Pharmacy Agreement (the Fourth Agreement) between the Commonwealth Government and the Pharmacy Guild of Australia was signed on 16 November 2005. The Fourth Agreement covers the period 1 December 2005 to 30 June 2010.
Since 1990, the Commonwealth Government and the Pharmacy Guild have entered into Agreements which set out the remuneration that pharmacists will receive for dispensing PBS medicines and the arrangements regulating the location of pharmacies approved to supply PBS medicines.
Over time these Agreements have increased in scope to provide for professional pharmacy programs and services.
Fourth Community Pharmacy Agreement CompilationThe Compilation Agreement is the Fourth Community Pharmacy Agreement of
16 November 2005, incorporating the amendments resulting from the implementation of the PBS Reforms.
On 16 November 2006 the Minister for Health and Ageing announced changes to the Pharmaceutical Benefits Scheme (PBS). Implementation of the PBS reforms required amendments to be made to the Fourth Community Pharmacy Agreement.
The Compilation Agreement is the Fourth Community Pharmacy Agreement of 16 November 2005 and the Amending Agreement of 02 March 2007.
This Compilation Agreement contains the following amendments to the Fourth Agreement:
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Part 1 - IntroductionContext
Inserted new clause 1.2
4. DefinitionsDefinition of Agreement amended
Inserted new definition - Amending Agreement
Inserted new definition - Approved Supplier
6. Duration of AgreementInserted new clause 6.2
Part 2 – Commonwealth Payments to PharmacistsAmended Table at 14.2, including footnotes
Amended clause 14.3
Inserted new clause 14.4
15. Risk Share ArrangementsAmended footnote numbering on clause 15.1
Part 3 – Other Payments20. Concessional Entitlement Validation Payments
Amended clauses 20 to 20.3
Inserted new clauses 20.4 and 20.5
21.4 Premium Free Dispensing Incentive PaymentInserted new clauses 21.4 to 21.4c (including footnote 12)
23. Community Service Obligation Funding PoolInserted new clause 23.6b
42. NoticesInserted new Annex 1 – Pharmaceutical Benefits Scheme (PBS) Reforms Fact Sheet
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The Fourth Agreement will ensure that Australians can continue to get the PBS medicines they need, at prices they can afford, regardless of where they live. For the first time, the Government will make payments to pharmaceutical wholesalers to make sure that they deliver the full range of PBS medicines to all pharmacies, regardless of location, and usually within 24 hours.
The Government is committed to ensuring that people living in rural and regional Australia have access to pharmacy services and the Fourth Agreement includes increased funding for rural pharmacy programs. The Fourth Agreement also includes increased support for programs that support and improve access to pharmacy services by Aboriginal and Torres Strait Islander peoples.
New pharmacy location arrangements provide for an increased level of competition between pharmacies, and aim to deliver pharmacy services where there is a community need.
The Fourth Agreement provides an estimated $11.1 billion in payments for the dispensing and supply of PBS medicines. This represents a substantial increase to the $7.9 billion paid under the Third Agreement. It equates to an average $11.38 per prescription dispensed, a nominal increase of 14.5 per cent (6.2 per cent in real terms) on the average payment under the Third Agreement ($9.93).
Between 1 December 2005 and 30 June 2006, existing remuneration arrangements will continue, except for pharmacists’ dispensing fees which will be increased to $4.94 for ready-prepared items and $6.97 for extemporaneously-prepared items.
From 1 July 2006, new remuneration arrangements will take effect, including:
- an increase in pharmacists’ dispensing fees to $5.15 for ready-prepared items and $7.19 for extemporaneously-prepared items;
- retention of the current pharmacy mark-up to cover costs associated with storing and handling medicines (but with a new cap of $40 for medicines priced over $1,000);
- a reduced wholesale mark-up of 7.5 per cent (equivalent to a 7.0 per cent wholesale margin), and the introduction of a cap of $69.94 for medicines priced over $930.06; and
- the establishment of a Community Service Obligation Pool for direct payments to wholesalers that supply the full range of PBS medicines.
Under section 98BAA of the National Health Act 1953, the Pharmaceutical Benefits Remuneration Tribunal must give effect to the remuneration arrangements provided for in the Fourth Community Pharmacy Agreement.
For further information on pharmacist remuneration refer to Part 2 of the Fourth Agreement.
Community Service Obligation for Pharmaceutical Wholesalers
The Fourth Agreement introduces a new Community Service Obligation (CSO) Pool with funding of $150 million per year in recognition of the additional costs faced by some pharmaceutical wholesalers in providing the full range of PBS medicines to pharmacies.
The aim of the CSO Funding Pool is to ensure there are arrangements in place for all Australians to have access to the full range of PBS medicines, via their community pharmacy, regardless of where they live and usually within 24 hours.
The CSO Funding Pool makes it commercially viable for pharmaceutical wholesalers to supply the full range of PBS medicines to pharmacies across Australia, regardless of pharmacy location and the relative cost of supply.
Under these arrangements, payments are provided directly to wholesalers who supply the full range of PBS medicines to any pharmacy, usually within 24 hours, and who meet certain service standards. These payments are over and above those made directly to pharmacists to cover the costs of supply from the wholesaler.
For further information on the CSO Funding Pool refer to Part 3 of the Fourth Agreement.
For information on the CSO operational arrangements, including the service standards and compliance requirements that wholesalers eligible to receive payments under the CSO Funding Pool are required to meet, please refer to the attachment below – The Operational Arrangements of the CSO Funding Pool.
The Operational Arrangements of the CSO Funding Pool (PDF 59 KB)
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The Fourth Agreement provides that the existing pharmacy location arrangements will remain in place until 30 June 2006 and, on 1 July 2006, new arrangements will commence.
These new arrangements will provide more flexibility to allow pharmacies to compete amongst themselves and to improve community access to pharmacy services, and will include new measures:
- for pharmacies relocating to large medical centres and small shopping centres;
- for a second pharmacy to be relocated to rural and urban settings where there is a large population;
- to relax the criteria for establishing new pharmacies;
- to relax the two year restriction on relocation;
- to improve access to medicines in private hospital settings; and
- to continue current restrictions on pharmacies within supermarkets.
The new arrangements will also give the Minister for Health and Ageing a discretionary power to approve pharmacies in unique circumstances where the application of the location rules would result in a community without access to pharmacy services.
The membership of the Australian Community Pharmacy Authority, the body which considers pharmacy applications, will also be expanded to include a consumer representative.
For further information on pharmacy location arrangements refer to Part 5 of the Fourth Agreement.
Professional Pharmacy Programs and Services
The Government and the Pharmacy Guild recognise that beneficial health outcomes can be achieved through the delivery of evidence based professional pharmacy programs and services. To this end the Fourth Agreement will provide $500 million in funding for professional pharmacy programs and services. This represents an increase from $400 million allocated under the Third Agreement.
The Fourth Agreement will continue to fund programs that were funded under the Third Agreement, such as Home Medicines Review, and it will fund new programs aimed at improving community health outcomes, such as in the areas of asthma, diabetes and communicable diseases.
For further information on Professional Pharmacy Programs and Services refer to Part 5 of the Fourth Agreement.
A full list of the eleven reviews and their current status is provided at:
The Fourth Agreement establishes two new committees.
The Agreement Consultative Committee (the ACC) will serve as the mechanism for consultation between the Government and the Pharmacy Guild on implementing the Fourth Agreement, including matters relating to the pharmacy location rules and pharmacist remuneration.
The ACC will comprise members from the Department of Health and Ageing and the Pharmacy Guild.
The Professional Programs and Services Advisory Committee (the PPSAC) will consider issues relating to the professional programs and services provided for under the Fourth Agreement. It will provide advice to the Minister on the funding, performance, management and outcomes of projects.
The PPSAC will comprise members from the Pharmacy Guild, the Pharmaceutical Society of Australia, and individuals and organisations with an interest in the programs being funded.
For further information on the role of these committees refer to Part 1 of the Fourth Agreement.
The Fourth Community Pharmacy Agreement includes a number of Professional Programs and Services. For further information on these please contact the Pharmacy Guild of Australia.
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