Bills Digest No. 186  1999-2000National Health Amendment Bill (No 1) 2000


Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details

Passage History

National Health Amendment Bill (No 1) 2000

Date Introduced: 31 May 2000

House: House of Representatives

Portfolio: Health and Aged Care

Commencement: Sections 1 to 4 of the Bill commence on Royal Assent.

The amendments to the National Health Act 1953 in Schedule 1 commence on 1 July 2000, except items 2 and 10, which commence on 30 June 2000.

Purpose

The purpose of this Bill is to amend the National Health Act 1953 to implement miscellaneous measures arising from the Third Community Pharmacy Agreement.

Background

On 16 May 2000 the Minister for Health and Aged Care, Dr Michael Wooldridge, and the Pharmacy Guild of Australia signed the Third Community Pharmacy Agreement (the 'Third Agreement').(1) The five-year agreement will run from 1 July 2000 to 30 June 2005.

The Third Agreement builds on the measures introduced in the First Community Pharmacy Agreement and the Second Community Pharmacy Agreement. The First Community Pharmacy Agreement, from 1991 to 1995, introduced a new remuneration framework for dispensing pharmaceutical benefits. It also began to restructure the pharmaceutical industry to reduce the number of pharmacies generally and to encourage rural and remote pharmacies. The Government provided significant financial incentives ($52 million over four years) for targeted pharmacies (for example, in metropolitan areas) to close or amalgamate, as well as providing financial support to pharmacies in rural and remote areas to remain open. Strict restrictions on relocation of existing pharmacies and approval of new pharmacies were also introduced.(2)

The Second Community Pharmacy Agreement, which expires on 30 June 2000, sought to consolidate these measures. In general terms, the restrictions on the location of pharmacies were maintained, although financial assistance for the closure or amalgamation of pharmacies was discontinued. The Second Agreement introduced important initiatives such as the remote pharmacy allowance (costing $18 million over five years), the isolated pharmacy allowance (costing approximately $2 million over five years) and medication management reviews for nursing home residents.(3)

The Third Agreement is worth a total of $5.6 billion over the next five years, including an estimated $5.2 billion in prescription-based remuneration to pharmacists and $416 million in other payments for the measures described below.(4) This is part of the Commonwealth's Pharmaceutical Benefits Scheme which has an estimated value of $22 billion over the five years of the Third Agreement.

The Third Agreement reduces the location restrictions that currently apply to pharmacy relocations and new pharmacy approvals, particularly in growing outer metropolitan areas and rural areas.(5) These changes are a result of the recommendations of the National Competition Policy Review of Pharmacy Legislation.(6)

A key feature of the Third Agreement is the announcement of a $74 million package over five years to maintain access to quality community pharmacy services in rural and remote areas of Australia.(7) The National President of the Pharmacy Guild of Australia, Mr John Bronger, has stated that this package of initiatives 'represents a three-fold increase of funds for rural pharmacies and a doubling of the number of pharmacies eligible for the various rural allowances'.(8) The rural pharmacy incentives include:

  • a Rural Pharmacy Maintenance Allowance to provide a financial incentive for pharmacy proprietors to remain in a rural or remote area of Australia. This will replace the isolated pharmacy allowance and remote pharmacy allowance from 1 January 2001 ($57 million over five years)
  • a Start-up Allowance to encourage the establishment of new pharmacies in rural or remote locations where there is a need for a community pharmacy ($1.5 million over five years)
  • a Succession Allowance, providing a staggered payment over three years to pharmacists wishing to purchase an existing pharmacy in a rural or remote location which is at risk of closure because of lack of purchasers ($2 million over five years)
  • substantially increasing funding for the existing Rural Pharmacy Workforce Development Program, which covers a range of initiatives to address the shortage of pharmacists in rural areas ($11.5 million over five years), and
  • an allowance to pharmacists to assist remote Aboriginal Health Services ($2 million over five years).(9)

The Third Agreement also introduces a new Pharmacy Development Program to 'promote the enhanced involvement of community pharmacy in the pursuit of quality and cost effective service delivery'(10) ($188 million over five years, including $7.5 million to the Guild to administer the Program). This will include programs for quality accreditation, the provision of quality use of medicinal information to consumers, and $15 million for research into initiatives in community pharmacy.(11)

The Third Agreement contains an extended Medication Management Services program which aims to give pharmacist advice, in conjunction with the medical profession, on the management of the medication-related needs of older people, in order to minimise the risk that people will suffer adverse side-effects from combinations of medication. This program includes an extension of the existing medication reviews for people in residential care, and introduces medication management reviews for people living at home ($114 million over five years).(12) The chairman of the Australian Medical Association's Council of General Practice, Dr David Rivett, is reported as having expressed concern that the scheme relies on pharmacists to suggest changes to medications, and that general practitioners are expected to be involved without being paid. He suggested that the existing medication reviews for veterans and nursing home patients had been 'done on the cheap'. The Pharmacy Guild of Australia supports the remuneration of general practitioners for their participation in medication reviews, although they are confident that pharmacists will obtain the special training needed to competently conduct reviews.(13)

As an incentive for signing the Third Agreement, $11 million will be paid to Community Pharmacies as a commencement bonus early in the first year of the Agreement.(14)

Part VII of the National Health Act 1953 contains detailed provisions about the supply of and payment for pharmaceutical benefits, together with the allowances payable to pharmacists. Most of the provisions in the Third Agreement can be implemented without any change to this legislation, although some minor amendments are necessary. These are set out below.

Main Provisions

Rural Maintenance Allowance

The Bill repeals the isolated pharmacy allowance, remote pharmacy allowance and professional allowance, effective from 1 July 2000 (items 1, 11 and 12 of Schedule 1). These allowances will be replaced by the Rural Maintenance Allowance, although that allowance will not commence until 1 January 2001.(15) According to the Explanatory Memorandum, from 1 July 2000 to 31 December 2000, isolated and remote pharmacy allowances will be payable administratively.(16) It is not clear why the legislative repeal of these allowances is not made effective from 1 January 2001, when the new Rural Maintenance Allowance will commence.

Presently, the Secretary of the Department of Health and Aged Care determines what allowances are payable, on recommendation from the Australian Community Pharmacy Authority, which in turn makes recommendations subject to rules determined by the Minister.(17) A person may apply to the Pharmaceutical Benefits Remuneration Tribunal for review of a decision by the Secretary to refuse payment of an allowance, or for review of recommendations made by the Authority that an allowance not be paid, or be paid subject to conditions.(18) These procedures are repealed, as the allowances themselves have been repealed (items 6 to 9, 13 to 15 of Schedule 1).

Payment of the new Rural Maintenance Allowance will not be subject to any legislative procedure, and will not be reviewable on application by aggrieved pharmacists. It will be payable solely in the discretion of the Minister, although the Agreement Management Committee(19) may advise the Minister on the rules and conditions applying to the allowance.(20) The Tribunal will no longer have any function in determining the rate of allowance, as it did have in determining the rate of the professional allowance when the Minister and the Guild could not reach agreement (item 3 of Schedule 1).

Extension of sunset clauses

Currently, pharmacists must apply to the Australian Community Pharmacy Authority for approval to supply pharmaceutical benefits from any premises, unless the application is for a change of ownership of a pharmacy that is to continue to operate from the same premises.(21) These provisions were to have ceased to have effect on 30 June 2000. Item 2 of Schedule 1 extends their operation to 30 June 2005, the end of the Third Agreement.

Item 10 of Schedule 1(22) extends the operation of Division 4B, which establishes the Australian Community Pharmacy Authority and sets out its functions and powers. The Division was to have ceased to operate on 30 June 2000, but will now continue until 30 June 2005. Although the Authority will no longer have any functions relating to allowances, it will continue to have a role in considering applications for approval of new pharmacies and pharmacy relocations.

Miscellaneous amendments

Item 4 of Schedule 1, which amends paragraph 98B(1)(c), repeals the Tribunal's function of advising the Minister on matters relating to remuneration for pharmaceutical benefits. It provides that the Tribunal may only perform such functions in relation to pharmaceutical benefits as are provided for in an agreement. The Third Agreement provides that disputes between parties relating to pharmaceutical benefits are to be resolved by the Tribunal only as a last resort if direct negotiation and mediation between the parties have failed.(23)

Currently, under section 99AAB, approved pharmacists who are receiving a remote pharmacy allowance are not required to use the Claims Transmission System for receiving payments in relation to the supply of pharmaceutical benefits. Item 5 of Schedule 1 repeals this exemption. Under the National Health Act 1953 as amended by the Bill, the only persons who may be exempt from using the Claims Transmission System are approved medical practitioners and suppliers whom the Secretary has declared to be exempt. However, the Explanatory Memorandum states that the guidelines will be amended to continue this exemption for pharmacists who are currently receiving the remote pharmacy allowance and who are not using the Claims Transmission System.(24)

Proposed section 4 of the Bill contains power for the Governor-General to make regulations before 1 January 2001 dealing with transitional or savings arrangements arising from the amendments made by the Bill, should any regulations be necessary.

Endnotes

  1. The text of the Third Community Pharmacy Agreement may be found on the website of the Pharmacy Guild of Australia at http://www.guild.org.au/thirdagreement/index.htm or on the Department of Health and Aged Care's website at http://www.health.gov.au/haf/docs/pharmagreement.htm.
  2. For more information, see the Explanatory Memorandum to the National Health Amendment (No 1) Bill 2000, p. 5.
  3. For more information, see the Explanatory Memorandum to the National Health Amendment (No 1) Bill 2000, pp. 6-7.
  4. Clause 5.1 of the Third Community Pharmacy Agreement.
  5. See Minister for Health and Aged Care, the Hon. Dr Michael Wooldridge, Media Release 16 May 2000, and clause 21.3 of the Third Community Pharmacy Agreement.
  6. This can be found on the Department of Health and Aged Care's website at: http://www.health.gov.au/haf/pharmrev/final.htm.
  7. Clause 40.1 of the Third Community Pharmacy Agreement. Although John Bronger, National President of the Pharmacy Guild of Australia, in his Letter to Guild Members states the figure as $75 million, and the Minister for Health and Aged Care, the Hon. Dr Michael Wooldridge stated the figure to be $76 million in the Second reading speech on the National Health Amendment Bill (No 1) 2000, Hansard p. 15696, 31 May 2000.
  8. John Bronger, Letter to Guild Members, http://www.guild.org.au/thirdagreement/letter.htm.
  9. This breakdown is not specified in the Third Community Pharmacy Agreement. The figures are taken from John Bronger, Letter to Guild Members.
  10. Clause 48.1 of the Third Community Pharmacy Agreement.
  11. John Bronger, Letter to Guild Members, and Minister for Health and Aged Care, the Hon. Dr Michael Wooldridge, Second reading speech on the National Health Amendment Bill (No 1) 2000, Hansard p. 15696, 31 May 2000.
  12. Clause 50 of the Third Community Pharmacy Agreement.
  13. John Kerin, 'Drug side-effects review', The Australian, 13 June 2000, p. 1.
  14. Clause 56 of the Third Community Pharmacy Agreement.
  15. Minister for Health and Aged Care, the Hon. Dr Michael Wooldridge, Second reading speech on the National Health Amendment Bill (No 1) 2000, Hansard p. 15696, 31 May 2000.
  16. Explanatory Memorandum to the National Health Amendment (No 1) Bill 2000, p. 2.
  17. See sections 99K, 99L, 99ZA, 99ZAA, 99ZD of the National Health Act 1953.
  18. See subsections 105AB(1), (11A) and (11B), 105AD(2) of the National Health Act 1953.
  19. The Agreement Management Committee is composed of members of the Department of Health and Aged Care, the Pharmacy Guild of Australia, and by invitation the Pharmaceutical Society of Australia, clause 6.1.1 of the Third Community Pharmacy Agreement.
  20. Clause 41.1 of the Third Community Pharmacy Agreement.
  21. Subsections 90(3A) to (3C) of the National Health Act 1953.
  22. Which amends section 99Y of the National Health Act 1953.
  23. Clause 17.1 of the Third Community Pharmacy Agreement.
  24. Explanatory Memorandum to the National Health Amendment (No 1) Bill 2000, p. 45.

Contact Officer and Copyright Details

Katrine Del Villar
19 June 2000
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

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and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 2000

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Published by the Department of the Parliamentary Library, 2000.

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