Review of Friendly Society Pharmacy Ownership
Background
Regulation of pharmacy ownership was subject to a national review under national competition policy (NCP). The final report of the national review, titled National Competition Policy Review of Pharmacy, dated February 2000, (‘the Wilkinson Report’) recommended limited deregulation of the ownership arrangements for pharmacy businesses.
In 2002-04, the department conducted a review of pharmacy legislation. Part of the review was to implement nationally agreed national competition policy (NCP) reforms to the provisions regulating ownership of pharmacies in Victoria.
On 16 November 2004, the Pharmacy Practice Act 2004 came into operation and introduced provisions that cap the growth of friendly society pharmacy ownership. These provisions (that cap the growth of friendly society pharmacy ownership) were enacted for a four-year period, which commenced 16 November 2004 (under the now repealed Pharmacy Practice Act 2004) and were due to end on 16 November 2008 under the current Health Professions Registration Act 2005 (‘the Act’) that came into operation on 1 July 2007.
Legislation
Under section 101(1) of the Act, only registered pharmacists, pharmacist owned companies, and legal entities known as ‘friendly societies’ which meet the statutory criteria set out in sub-section 101(1)(c), are legally allowed to own or hold a proprietary interest in a pharmacy business.
The Act also provides limits as to the number of pharmacies that may be owned:
Section 101(2) of the Act limits to five the number of pharmacies a pharmacist or pharmacist owned company may own.
Section 174(4) provides that:
- friendly societies which own less than six pharmacies are permitted to own a maximum of six, and
- friendly societies which own more than six pharmacies may grow by 30% over four years.
These provisions that cap the growth of friendly society pharmacy ownership were due to end on 16 November 2008.
Prior to the passage of the Pharmacy Practice Act in November 2004, there were no legislative restrictions on the number of pharmacies that could be owned by friendly societies in Victoria.
As the provisions that cap friendly society pharmacy ownership represented a new restriction on the expansion of friendly society ownership of pharmacies in Victoria, the then Minister for Health gave a commitment to review the effects of this restriction before the provisions sunset on 16 November 2008.
The department invited submissions from interested parties in relation to a Review on the cap on friendly society pharmacy ownership under the Act. Submissions received and the outcome of the review is documented below.
Terms of reference
The Review of the effect of section 174(4) of the Act was conducted by the Service and Workforce Planning Branch of the department.
The aim of the Review was to identify and assess the costs and benefits of the growth cap on friendly society pharmacy ownership in Victoria, with a view to formulating advice on the legislation in relation to friendly society pharmacy ownership.
In making recommendations to the Minister for Health, the department has took into account the following:
- the regulatory principles and framework set out in the Victorian Guide to Regulation1 published by the Victorian Competition and Efficiency Commission (VCEC), in order to ensure well-targeted, effective and appropriate regulation;
- the views of stakeholders, including pharmacists, pharmacy professional associations, and consumers and their representative groups; and
- the COAG decisions of July 2006 and April 2007 to establish a national registration and accreditation scheme for the nine health occupations regulated in all states and territories, including pharmacy.
Other information
Submissions closed on Tuesday 11 March 2008.
The list of organisations and their submissions to the review are set out below.
|
Name of Organisation |
|
|
1 |
Association of Professional Engineers, Scientists and Managers, Australia – Pharmacists Division |
|
2 |
Australian Friendly Societies Pharmacies Association |
|
3 |
National Pharmacies |
|
4 |
Pharmaceutical Society of Australia, Victorian Branch |
|
5 |
Pharmacy Board of Victoria |
|
6 |
The Pharmacy Guild of Australia |
| 7 | Society of Hospital Pharmacists of Australia, Victorian Branch Submission - Society of Hospital Pharmacists of Australia, Victorian Branch (pdf file 48k) |
|
8 |
United Friendly Society Dispensaries |
|
9 |
Victorian Friendly Societies Pharmacies Association |
Outcome of review
Amendments to the Act passed through the Victorian Parliament on 11 November 2008 and received Royal Assent on 14 November 2008. As part of these amendments the Victorian Parliament approved extending the growth cap for pharmacy ownership by friendly societies type companies indefinitely and providing for controlled growth for pharmacy ownership by friendly societies that owned 6 or more pharmacy businesses before 17 November 2008. These provisions are outlined under section 174 of the Act.
1 The Victorian Guide to Regulation is available at the following website: www.vcec.vic.gov.au