David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

I move:

That:

Schedule 5, Part 1, page 49 (lines 2 to 7), to be opposed.

[Australian Consumer Pharmacy Authority]

I have some questions for the minister. Minister, this removal of location rules, or the sunset clause on location rules, has been the subject of multiple inquiries, including one by the Productivity Commission. Can you provide an explanation to the Senate as to why those reviews, which have invariably recommended removal of location rules—and in particular the Productivity Commission's recommendations—aren't being applied?

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

Thank you, Senator Leyonhjelm. The pharmacy location rules are a longstanding and fundamental part of the Pharmaceutical Benefits Scheme as we know it today. In 1985, there were just under 5,500 pharmacies in Australia, and an inquiry conducted by the Pharmaceutical Benefits Remuneration Tribunal in 1998 found that there was a marked inconsistency in the location of community pharmacies supplying PBS medicines. It found that many urban areas had clusters of pharmacies while access in rural and remote communities was relatively poor, with significantly lower pharmacy-to-population ratios. For some rural and remote communities, the distance to a pharmacy made it difficult or expensive to access PBS medicines.

The introduction of location rules in 1991, with the first Community Pharmacy Agreement, resulted in a restructure of the industry that reduced the number of pharmacies, in the short term, but encouraged greater efficiency and economies of scale in individual pharmacy businesses. The objective of the pharmacy rules, and the government sees no need to change this, was to encourage a widely distributed network of PBS pharmacies that matched the demographic spread of the Australian community.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

Thank you for that, Minister. I'm Chair of the Select Committee on Red Tape, which recently examined this issue in an inquiry, and the committee was told much the same thing. In fact, I wouldn't be surprised if the same people wrote the submission to the committee as just wrote your response to my question. But the committee was unable to determine how restricting the right to establish or preventing the establishment of clusters of pharmacies in metropolitan areas would somehow help access to pharmaceuticals in rural and regional areas. Nobody was able to provide a coherent answer to that question. On the other side of the equation, of course, is that clusters of pharmacies are not inherently bad. Indeed, clusters of food shops often result in better choice and lower prices. Clusters of clothing shops are not at all uncommon and similarly result in better choice and lower prices. So I'm wondering if you've been provided an answer to the question as to how avoiding clusters of pharmacies in metropolitan areas somehow helps access to pharmaceutical medicines in rural and regional areas.

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

The objective of the location rules is to encourage a widely distributed network of PBS pharmacies that matches the demographic spread of the Australian community, and I'm advised that there is certainly evidence that the distribution has improved. Since June 2013, the pharmacy-to-population ratio in rural localities has in fact been better than the pharmacy-to-population ratio in urban areas.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

What my amendment would do would be to remove something which is quite unnecessary in this bill we are considering. The rest of the bill is fine, but this rather sneaky little provision removes the June 2020 sunset clause that regulates the location of pharmacies and establishes whether an application to establish one can be granted.

There have been seven reviews, if I'm correct, since 2000 into these Pharmacy Location Rules. I don't think any of them have found the Pharmacy Location Rules to be well founded. Certainly the Productivity Commission didn't think so. The Grattan Institute has warned about a 15-year cycle of review that's creating 'public cynicism and disengagement'. It argues:

Pharmacy regulation is overdue for reform, not further review with implementation stymied by vested interests.

The Department of Health, on the other hand, says:

The Location Rules ensure that the community pharmacy sector remains viable and able to meet consumers' needs throughout Australia, including … in rural and remote areas …

It just defies logic. The Australian Medical Association says pharmacy rules are unnecessary. The Pharmaceutical Society of Australia says, yes, the pharmacy rules are necessary, but on the other hand 'they prevent our members from establishing pharmacies'. Indeed, the only industry group that the committee heard from that thinks the pharmacy rules are a good idea is the Pharmacy Guild. The Pharmacy Guild is comprised of existing pharmacy owners—so, as someone once famously said, 'You would expect them to say that, wouldn't you?' It defies belief that an industry organisation, the Pharmacy Guild, can determine, under both the Liberals and Labor, that existing pharmacies are entitled to be protected from competition by location rules on the fig-leaf justification that somehow or other people in regional and rural areas will have better access to pharmaceuticals as a consequence. It is absolute nonsense, and review after review has said it is nonsense. The only ones who don't say it's nonsense are the Pharmacy Guild. I cannot believe the government is falling for this nonsense.

Helen Polley (Tasmania, Australian Labor Party, Shadow Assistant Minister to the Leader (Tasmania)) Share this | Link to this | Hansard source

Since 1990, the locations rules have been an important part of the regulation of community pharmacy. Labor supported the extension of these rules in 2015 and reiterated at the election in 2016 that we would continue to do so. Labor will not be supporting this amendment.

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

The government recognises the pivotal role of the community pharmacy sector in delivering medicines to Australian patients. The government's compact with the Pharmacy Guild in May last year, which included a continuation of the location rules, secures the support of community pharmacy in making further PBS reforms. I should indicate that the government is not supporting the amendment.

The CHAIR: The question is that schedule 5, part 1, stand as printed.