Multi-billion dollar pharmacy deal falls foul of audit
Negotiations on a fresh multi-billion dollar funding deal for the nation’s pharmacies have been overshadowed by revelations of spiralling taxpayer handouts, cost overruns and inadequate government oversight.
An investigation by the Commonwealth Auditor-General has found significant shortcomings in the operation of the current $15.4 billion Community Pharmacy Agreement, under which the Federal Government has paid out $13.8 billion to chemists to dispense medicines through the Pharmaceutical Benefits Scheme.
In a scathing assessment of the administration of the Agreement, the Auditor-General found a $200 million shortfall in expected savings, a $300 million blow-out in pharmacist incentive payments, and the diversion and re-allocation of more than $13 million of funding without ministerial approval.
“The Department of Health’s administration of the Fifth Community Pharmacy Agreement has been mixed, and there is a limited basis for assessing the extent to which [it] has met its key objectives, including the achievement of $1 billion in expected savings,” the report said. “A number of key government negotiating objectives for the 5CPA were only partially realised, and there have been shortcomings in key aspects of Health’s administration at the development, negotiation and implementation phases.”
Health Minster Sussan Ley, who is set to begin negotiations with the Pharmacy Guild of Australia on the next five-year Community Pharmacy Agreement, said the findings were deeply concerning.
Ms Ley said the Auditor’s revelations raised serious questions not only about the Health Department’s administration of the agreement, but also negotiation of the current agreement by the previous Labor Government, which signed off on it in 2010.
“These serious allegations seem to be just another example of Labor’s culture of secret handshakes, winks and nods and general incompetence in Government,” the Minister said. “Labor was either complicit or incompetent in their oversight of these alleged failures in proper process and ministerial accountability, and they must answer these serious questions.”
Shadow Health Minister Catherine King called on Ms Ley to commit to making public the details of her forthcoming Community Pharmacy Agreement negotiations and publishing detailed costings.
The Auditor-General’s report has come at a highly sensitive time for the industry, which is not only negotiating a new Community Pharmacy Agreement but is also pushing hard to expand the range of services pharmacists are allowed to provide, including flu vaccinations and health checks.
The Pharmacy Guild earlier this year launched a multi-million dollar advertising campaign in an effort to boost the public standing of pharmacists.
But the message risks being undermined by revelations that chemists add up to eight different charges and mark-ups to the cost of a prescription, including dispensing, dangerous drug and container fees. News Limited has reported that these accumulated charges can inflate the price of a box of 112 aspirin from $1.10 at the wholesaler to $13.31.
The Guild’s image risks being further tarnished by findings that $5.8 million provided to it by the Commonwealth to fund professional development programs has instead been diverted into financing a “communications strategy” without ministerial approval, and that most of the $7.3 million given by the Government to encourage electronic prescribing has been used for other purposes.
The Health Department has accepted Auditor Office recommendations to improve its administration of Community Pharmacy Agreements, including more stringent account keeping and documentation standards.
But the Guild said the Auditor-General had not made “any adverse findings” regarding its role in administering the agreement.
Published: 18 Mar 2015