What is Community Pharmacy?

Australia’s system of community pharmacy and the Pharmaceutical Benefits Scheme are recognised as among the best medicine distribution systems in the world. Pharmacists are highly trusted professionals. Public opinion surveys have shown that 95 per cent of patients are satisfied with their local community pharmacy. There are around 5,600 community pharmacies nationwide and in capital cities, 95 per cent of consumers are no further than 2.5 km from a pharmacy. In regional areas, 72 per cent of people are within 2.5 km of a pharmacy. That’s a lot of pharmacies and that’s a lot of trusted healthcare professionals supporting our communities.

What is the Community Pharmacy Agreement?

The Community Pharmacy Agreement is a five-year agreement (now in its sixth cycle) that governs how community pharmacies supply medicines listed on the Pharmaceutical Benefits Scheme (PBS). While the average Australian makes more than 14 visits to a community pharmacy every year, not many know about how this agreement impacts pharmacy in Australia.

Pharmacies buy medications from wholesalers, supply them to people who bring in prescriptions and are reimbursed by the Government for drugs listed on the PBS. They’re also paid for the professional advice they provide when dispensing medicines.

Patients pay a contribution towards the cost of their subsidised medication to the pharmacist – this is called a co-payment.

The Sixth Community Pharmacy Agreement (6CPA) is an $18.9 billion, five-year commitment by the Federal Government to Australia’s community pharmacies.

  • The 6CPA delivers benefits for pharmacies (Administration, Handling and Infrastructure Fee, additional funding for patient health services) but pharmacies are also dealing with the adverse impact of the $6.6 billion in savings measures in the broader PBS package.
  • The broader PBS package agreed at the time of the 6CPA provides savings to the Federal Government of $3.7 billion between 2015 and 2020, net of the 6CPA investment.

Pharmacies have borrowed, invested and employed staff on the basis that the commitments in the 6CPA with the Government will be delivered in full.

The average Australian visits a pharmacy 14 times a year. Annually there are about 350 million individual patient visits to pharmacies.

What is the Sixth Community Pharmacy Agreement (6CPA) risk-share?

Under Part 5.4 of the Sixth Community Pharmacy Agreement (6CPA), there is an annual reconciliation of dispensing remuneration based on the annual prescription volumes that were agreed in the 6CPA.

  • If a variance in annual prescription volumes from the 6CPA estimates is material (excess or shortfall) the Government can agree a risk-share arrangement to address the identified variance.
  • This risk-share can result in either the Government or pharmacies being recompensed depending upon whether the actual volumes are materially higher or lower than the 6CPA estimates.

The purpose of the risk share is that it provides certainty both for the Federal Government and for Australia’s 5,600 community pharmacies.  It goes to the heart of why the Government and community pharmacies have had six successive agreements.  They enable the Government to have certainty about its level of investment in community pharmacy, which in turn provides pharmacies with the certainty they need to continue investing in their businesses.

The Guild recognises the risk-share must cut both ways, with recompense to the Government should the annual prescription volumes materially exceed the 6CPA estimates.

What happened to prescription volumes in 2015-2016?

In 2015-16, actual prescription numbers were 6.5 million or 2.14% below the agreed 6CPA estimates. This created a large unanticipated reduction in expenditure for the Government from subsidising the supply of fewer medicines, but also resulted in a shortfall in dispensing remuneration for pharmacies compared to what was agreed in the 6CPA.

What is the additional investment in pharmacy health care services?

The Sixth Community Pharmacy Agreement (6CPA) includes a significant increase in the level of Government investment in patient health services delivered through community pharmacies. This additional funding includes $50 million for a Pharmacy Trial Program to trial patient health services through community pharmacies and $600 million for the rollout of new and expanded patient health services delivered through community pharmacies.  These new and expanded services are due to commence on 1 July 2017 and run for the final three years of the 6CPA.

Six Community Pharmacy Agreements have been successfully negotiated between the Government and the Guild, underpinning pharmacies and the PBS over 25 years.

Subscribe to the latest updates

Stay up-to-date by subscribing to the latest email updates and stay current with what’s happening in the media.