Pharmacy ownership

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Chapter 6 Pharmacy ownership

INTRODUCTION

At the present time pharmacy ownership is restricted to pharmacists or corporate entities controlled by pharmacists. These ownership arrangements are detailed in the pharmacy/pharmacist registration Acts and regulations existing in each state and territory. While there have been a number of challenges to the present restrictions on ownership over the years the present arrangements appear entrenched. There may be modest expansion of the ownership provisions in some jurisdictions with new or reviewed registration legislation allowing various corporate models of ownership. However, at this time it would appear that there is little likelihood of any significant movement away from pharmacist ownership, whether as a sole proprietor, as a partner, or through a corporate entity.

In a number of jurisdictions, pharmacies may also be owned by friendly societies. A friendly society is composed of a body of people who join together for a common purpose. Before the availability of insurances and the development of the so-called welfare state, friendly societies played an important role in people’s lives, providing a range of financial and social services not otherwise available to individuals. One area where traditionally friendly societies have been active is in the field of health; in Australia (and New Zealand) this translated into pharmacy ownership. Although the importance of friendly societies is somewhat diminished in contemporary Australian society, the ownership of pharmacies by friendly societies is still reflected in much of the current legislation governing pharmacy practice.

NATIONAL COMPETITION POLICY REVIEW OF PHARMACY

A national review of state/territory pharmacy legislation and certain provisions of Commonwealth legislation relating to the Pharmaceutical Benefits Scheme (PBS) and the National Health Act 1953 (Cth) was conducted by Warwick Wilkinson under the National Competition Policy systematic legislative review process.[1]

The terms of reference examined the restrictions that legislation may impose on three areas of pharmacy practice, namely:

The review and recommendations were completed in February 2000. In part, the review examined the question of the ownership of pharmacies and interpreted its ownership reference:

Eight recommendations relating to pharmacy ownership were contained in the report. Recommendation 1 recommended that the present legislative restrictions on the ownership of (community) pharmacy by registered pharmacists be retained. Recommendation 2 supported the removal of residential requirements for pharmacy ownership while retaining the requirement for a pharmacy owner to be registered in that particular state or territory. Recommendation 3 supported the retention of different ownership structures permitted by the various state and territory legislation only insofar as it allowed minority shareholding in corporations by prescribed relatives of pharmacists; it did not support minority (or majority) shareholding by non-pharmacists who were not prescribed relatives.

Recommendation 4 was contentious in that it supported the removal of restrictions about the number of pharmacies a person may own or have an interest in. There was a great deal of opposition to this recommendation from within the ranks of pharmacy regulators and professional organisations notwithstanding that the review further recommended that the effects of lifting the restrictions be monitored to ensure it did not lead to undue market dominance by individuals or groups or result in any other inappropriate market behaviour.

Recommendation 5 related to friendly societies and supported the removal of any regulations specific to the establishment of friendly society pharmacies that do not also apply to other proprietors. While Recommendation 6 supported the retention of regulations restricting non-pharmacists from having a direct proprietorial interest in community pharmacies, it did propose at Recommendation (6)(c)(3) that any regulations that prevented commercial considerations for third parties based on a pharmacy’s turnover or profit be removed. Recommendation 7 supported the removal of legislative requirements for the registration of pharmacy premises and the registration of pharmacy businesses (subject to provisions) as the review could see no public benefit in their retention. Recommendation 8 required that legislation relevant to the delivery of pharmacy services provided for an acceptable range of services, and appropriate quality assurance and professional practice standards be adopted by community pharmacies.

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