If pharmacists lose control of their businesses, the biggest issue will be public safety

Opinion: The High Court’s recent finding that five Countdown pharmacies were unlawfully granted licences to operate presents a timely opportunity to consider the ownership and control of pharmacies and why it matters.

Under current rules, a pharmacist must own more than half of a pharmacy business and also have “effective control”. The court’s decision hung on what these two little words mean. In short, it found, not unreasonably, that the pharmacist must be able to have the final say in how the business is run.

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This wasn’t the case with the five Countdown pharmacies, and their licences were held to be unlawfully granted by the Ministry of Health and therefore invalid.

The Countdown model had relied on what’s dubbed “negative control”: decision-making was spilt 50/50 between a pharmacist director and a non-pharmacist director and all decisions had to be unanimous. Though the pharmacist could veto decisions of the non-pharmacist, they couldn’t make decisions of their own volition so didn’t have “effective control”.

It’s been suggested these chains have used their ‘free’ prescription schemes as loss-leaders to encourage spending in other areas. Whether that’s the case, the tactic has in effect been sidelined by the Government’s announcement that it’s removing the $5 co-payment from July 1, 2023

Countdown pharmacies aren’t alone in their use of negative control and the court’s ruling will likely spell changes in how some other pharmacy corporates operate – as well as potentially spur lobbying efforts to relax the rules.

For their part, independent pharmacy owners will doubtless welcome the court’s decision as it reaffirms the legal importance of their position.  

Why does a pharmacy need to be under the control of a pharmacist? After all, competition is generally seen as good for innovation and reducing costs for consumers. The influx of discount pharmacy chains has certainly led to new business models, offering customers convenience and ‘free’ prescriptions— Countdown and other discounters don’t charge the $5 prescription co-payment.

It’s been suggested these chains have used their ‘free’ prescription schemes as loss-leaders to encourage spending in other areas. Whether that’s the case, the tactic has in effect been sidelined by the Government’s announcement that it’s removing the $5 co-payment from July 1, 2023.

But this isn’t really a debate about another business taking a slice of the pharmacy pie. The bigger issue is the implications for public safety if pharmacists lose control of their businesses.

Effective control of a pharmacy is intended to safeguard public safety and ensure practices align with ethical standards. As a profession, pharmacists have a commitment to supporting people to have access to safe and effective medicines, sometimes meaning the prioritisation of community health over profits. Effective control is one safeguard to ensure this access occurs.

Pharmacists also have skills in the management of health conditions and play a core role in health service delivery. After five years of study, they are trained to recognise and act on issues related (but not limited) to medicine interactions, appropriateness based on disease and person-specific factors, and consideration of efficacy and cost.

This is a key role, given that medication-related harm accounts for half of all preventable harm in medical care globally and medication errors cost an estimated US$42 billion annually, according to the World Health Organisation.

The job of pharmacists is also expanding, in part to reduce pressures in other areas of health care. They provide an increasingly large pool of extended services, ranging from vaccinations and now (as part of the Government’s Winter Plan) delivery of a minor ailments service to certain segments of the population.

Notably, however, the pharmacy sector is at risk with the closure of many rural and remote pharmacies, the difficulty of retaining pharmacists, and recent poor pass rates in intern pharmacists’ registration exams (47 percent pass rate in 2022). Reduced pharmacy retail sales (including products such as cosmetics) are also affecting profitability.

These factors highlight the need to consider carefully what we want from our pharmacist professionals and from the pharmacy sector.

Any moves to get rid of the “effective control” rule would likely see an inflow of pharmacies run by non-pharmacists. Smaller pharmacist-owned stores would find it even harder to compete against large chains that have economies of scale. On both sides, businesses may promote more profitable services at the expense of less profitable, though still necessary, health services.

As a result, safety standards may be undermined. It may also mean pharmacies fail to provide personalised care or build relationships with the people who use their services.

If the dispensing and health service delivery functions were separated from the rest of the pharmacy business model – ie the sale of cosmetics and similar products – then perhaps stores wouldn’t need to be under the effective control of a pharmacist. But for this to occur, funding models would need to change, including perhaps funding individual pharmacists rather than pharmacies.

Whatever decisions are made about pharmacy ownership and control, they should not come at the expense of public health.

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