Former national president, Pharmacy Guild of Australia
While this is usually the time of year to reflect, I want to focus on what lies ahead for pharmacy in 2016.
In summary 2016 will be the year of promises and commitments.
1/ Federal election
2016 will be a federal election year with the key question being in which month it will be called by Prime Minister Turnbull — before the federal budget because of Australia’s deteriorating tax revenue position, or at the full term?
The promises and commitments to pharmacy from the major and minor political parties will be critical. What will the Coalition government produce from its many reviews into health? Will pharmacy be presented opportunities from the MBS review of services? The government is also conducting a review into the management of complex and chronic healthcare through the Primary Health Care Advisory Group. Plus is a review of private health insurance. More broadly, will we be facing a 15% GST election and/or GST being applied more broadly?
2/ The reviews
There will be a so-called ‘independent’ public review of pharmacy remuneration and regulation which will dominate 2016.
I am surprsied there has not been an outcry on the selection of Professor Stephen King, from Monash University, and Ms Jo Watson, from the Consumers Health Forum, as two of its members. The cards are stacked against pharmacy given their publicly stated views.
There will be a review of remuneration through pharmacy, both in terms of the level of funding and how this is provided for dispensing PBS medicines; and of PBS supply chain arrangements, including the logistics and distribution of medicines across Australia, and regulatory requirements and cost to the community and government. Further, what will pharmacy location rules be with regards to supporting access to PBS medicines?
3/ Agreement impact
While many people think the Agreement is finalised, 2016 is the year when many of its price impacts come into play.
1 Jan: Community pharmacies will be allowed (but not mandated) to discount the co-payment by a maximum of $1. I expect an aggressive approach by many pharmacy groups. One sleeper issue will be the expansion of the Safety Net 20-day rule arrangements, which will apply to a broader range of PBS-listed medicines.
1 Apr: Sees the PBS formulary 1 pricing arrangements kick in. The measure will apply a one-off statutory price reduction of 5% to all brands of pharmaceutical items on the PBS formulary 1 (F1) after they have been listed for at least five years. There will be important stock management issues faced by pharmacies.
Second, price disclosure calculations for combination medicines will change significantly. The measure will amend the current pricing policy for multi-ingredient and multicomponent medicines (‘combination items’) listed as formulary 2 (F2) medicines. There can be significant price differences between component medicines and combination items containing the component medicines, in some cases a more than 80% difference. This is due to an existing ‘loophole’ in the price disclosure framework. Accordingly, this change will address the loophole by ensuring appropriate price reductions are applied to combination items on the PBS. This means more stock management issues and reduced remuneration.
1 Oct: For this disclosure cycle, there will be a big impact on the bottom line. Originator medicines will be removed from the calculation. For medicines that have been listed under the F2 for three years or more, the originator brand will be removed from the calculation of the weighted-average disclosed price for medicines. Even if the generic has negligible market share, there is no offset. Some medicines will drop by 60% and this will see deep price cuts in that cycle and further stock management issues.
Events with no time frames allocated — there is a lot of money tied up in the agreement on professional services and no timelines have been set. Every month there is a delay, there is savings for the Commonwealth. As evidence, the delay in announcing changes to dose administration aids (DAAs) remuneration will mean the significant money allocated in the first year for DAAs will not be spent.