Community pharmacy protection: for good or ill?

Author Bill Suen Published 4 September 2009

The Australian community pharmacy sector has been reporting strong growth right through the global financial crisis—leading many people to ask, does community pharmacy require protection?

The protections afforded pharmacy—such as rules governing how many pharmacies are allowed in an area, that pharmacies can only be owned by registered pharmacists, and the fact that the price of prescription medicines is fixed by government through the PBS—has long been the subject of criticism from a range of interest groups.

Despite the growth the Pharmacy Guild of Australia last week asked Deputy Prime Minister Julia Gillard to block the January 2010 introduction of the Pharmacy Industry Award, claiming that the new Award would jeopardise jobs and put pressure on pharmacies.

Anti-protectionists argue that the heavily protected industry supports inefficiency and discourages competition, leading to poor performance and higher prices. Only recently residents of a country town partitioned the government to allow a new pharmacy to open in a two-pharmacy town. The partition highlighted that both pharmacies were owned by the same pharmacist; the lack of competition produced higher prices and poor service.

On the other hand, many pharmacists maintain that the current system maintains a robust community pharmacy network that serves rural communities particularly by ensuring that pharmacies are strategically located in all major rural areas—something that does not apply to medical practitioners, banks or supermarkets. The location restrictions also precludes pharmacists from opening a new pharmacy in the location of their choosing, which ensures that new entrants into the pharmacy market must open in growing communities or under-serviced areas.

So is it time to reform the pharmacy protection rules? What do we gain or lose if we do?