Pharmacy Guild Agreement Update
The Government has reached an in-principle agreement with the Pharmacy Guild regarding the
Sixth Community Pharmacy Agreement (6CPA).
The proposed 6CPA delivers a significant remuneration to pharmacy with an offer of $18.9 billion
over 5 years. 5CPA signed under Labor was valued at $15.7 billion.
The Government’s Proposal
Key features of the Abbott Governments $18.9 package include:
$3 billion in new funding, including
 $1.5 billion in new funding for an Administration, Handling and Infrastructure fee (AHI) to
support pharmacy viability, as requested by the Guild.
 More than doubling program funding to over $1.2 billion, recognising pharmacies desire to
move from retail to health care provision (growing from $613 million).
 Continued growth in scripts and moving dispensing fee indexation from WCI9 to CPI, as
requested by the Guild.
 Allowing pharmacies to offer an optional maximum $1 discount per script on current copayments concessional ($6.10) and general patients ($37.70). This measure will help
introduce greater competition for consumers and pharmacies and deliver money back into
the pocket of patients.
 Continuation of the Pharmacy Location Rules for the life of the agreement.
What does this mean for pharmacies?
o More funding for dispensing
o More funding for programs such as dose administration aids and medication reviews
Programmes and services
The Government will fund $613m for continuing services and $650m for new and innovative
services to be provided by pharmacy.
The Government will provide continued investment of $613 through the Sixth Community
Pharmacy Agreement (6CPA) for pharmacists to deliver medication management services (such as
Home Medicines Review, Residential Medicine Management Review, Meds Check and Diabetes
Meds Check), Dose Administration Aids and improve health outcomes for Aboriginal and Torres
Strait Islands and people in rural and remote Australia.
The Government will also enable the implementation of other initiatives to support access to
Pharmaceutical Benefits Scheme (PBS) medicines, specifically through expanding arrangements for
the Continued Dispensing of PBS medicines in defined circumstances.
However, unlike previous agreements under the 6CPA, all programmes (new and existing) will
undergo a clinical and cost-effectiveness assessment by the appropriate committee such as the
Medical Services Advisory Committee, to ensure clinical effectiveness and value for money in the
future.
Dispensing
The Government recognises the unique role pharmacists play at the frontline of stocking and
dispensing a wide variety of essential medicines for Australians.
The Government will therefore look to provide pharmacists with greater stability in dispensing
income through the introduction of an Administration, Handling and Infrastructure fee (AHI).
This will replace the existing pharmacy mark-up system by providing a simpler, more-transparent
set fee paid on a per script basis. It also provides pharmacists with pricing certainty by delinking
their remuneration from the variability in medicines prices brought about by price disclosure.
The introduction of this fee will maintain dispensing remuneration at the average cost under the
current (Fifth) Agreement. The value of this measure is expected to be $1.5 billion over five years.
Discounting co-payments
This measure will increase competition in the pharmacy sector and provide all Australians the
ability to negotiate a reduction to the price of their PBS co-payment.
The existence of a maximum discount level of $1 ensures a price signal for consumers is
maintained, and limits impact on pharmacy.
Many (non-concessional) general patients already benefit from discounting practices in the
pharmacy. This change this will enable concessional patients to also receive discounts. This
provides concessional patients access to cheaper medicines, potentially $1 off every script.
The average concession card holder uses 17 scripts per year. They could save $17 per year, while
average concession card holders aged over 65, could save $43.
High volume users will benefits from upfront lower costs and still receive medicines for free after
reaching the safety net.
General patients who use medicines that cost more than $37.70 will also be eligible for the $1
discount, reducing their payment to $36.70.
As patients are paying less for their scripts each year, they would take longer to reach their safetynet threshold, but will not have to spend any additional money to reach the safety net.
A comprehensive review of pharmacy remuneration and regulation
The Abbott Government has complied with the recommendations of an Australian National Audit
Office report into the Fifth Community Pharmacy Agreement as part of this process and will make
further announcements about the full details of the entire proposed pharmaceutical benefits
package once finalised.
The Review will deliver a comprehensive review and public evaluation, within the first two years of
the Sixth Community Pharmacy Agreement (6CPA), to allow for a transparent assessment of the
appropriateness of Pharmacy Location Rules and remuneration arrangements for pharmacy
dispensing and wholesaling into the future.
The 2014 National Commission of Audit, the Productivity Commission’s Competition Policy Review,
the Australian National Audit Office (ANAO) report into the Administration of the Fifth Community
Pharmacy Agreement, and the Productivity Commission paper titled Efficient in Health have all
highlighted the need to consider a comprehensive review. The review is expected to commence 1
September 2015.