Background

On 13 May 1997 the Prime Minister, in his role as Chairman of the Council of Australian Governments (COAG), wrote to State Premiers and Territory Chief Ministers, seeking their agreement to a national competition review of pharmacy regulation. On 1 May 1998, the Prime Minister advised Premiers and Chief Ministers that all Governments had agreed to the review.

Legislation to be Reviewed

The specific items of legislation to be reviewed are listed at Attachment A.

In summary, they include:

in relation to State and Territory responsibilities, legislation concerning pharmacy ownership and the registration of pharmacists; and

in relation to Commonwealth responsibilities, section 99L of the National Health Act insofar as it relates to the regulation of the location of premises from which pharmacists may dispense pharmaceutical benefits.

Objectives and Scope of the Review

Clarify the objectives of the legislation listed at Attachment A.

Identify the nature of any restrictions on competition arising from that legislation.

Analyse the likely effects of those restrictions on competition and on the economy generally.

Assess and balance the costs and benefits of the restrictions, and assess whether the objectives of the legislation can be achieved only by restricting competition.

Consider alternative means for achieving the objectives, including non-legislative approaches, and assess the costs and benefits of pursuing those alternatives.

The review will have regard to the relevant sections of the Competition Principles Agreement, the COAG Guidelines and Principles for National Standard Setting and Regulatory Action, the COAG Guidelines for Review of Professional Regulation and make use of material contained in guidelines published by Commonwealth and State governments on regulatory impact statements and on conducting National Competition Policy legislation reviews. If practicable, the review should also have regard to the outcome of related reviews such as the national competition review of drugs and poisons regulation.

The review should also assess the net public benefit of the legislation having regard to the public benefit criteria set out in clause 1(3) of the Competition Principles Agreement (see Attachment B).

In the case of Tasmania and Queensland, the review will not cover the registration of pharmacists as this legislation has already been reviewed. Top of page

Review Administration

Chair and Steering Committee

The review will be conducted by an independent Chair who will be supported by a small secretariat. The Chair will be advised by a Steering Committee specifically established for that purpose.

The Chair should have familiarity with economic principles and the pharmacy industry. He/she will be selected from a short-list of nominees prepared by the Commonwealth Department of Health and Ageing in consultation with State and Territory health departments.

Nominations for membership of the Steering Committee will be obtained through consultation involving Commonwealth, State and Territory Departments of Health and the Committee for Regulatory Reform of COAG. A key criterion for the Steering Committee is that it comprises one representative from each jurisdiction and that that person is able to represent the government agency whose legislation is subject to the review.

Resources

The Commonwealth will fund half the costs of the review, excluding Steering Committee participation costs, which are to be met separately by each participating government. The remaining costs of the review will be shared proportionately according to the population of each State and Territory. If considered appropriate, any participating government may offer to second an officer to the review Secretariat as part of its contribution.

Costs to be taken account of in developing a budget for this review include:

• staffing and office costs for secretariat;
• payment to an independent Chair;
• payment to any consultants contracted;
• costs of producing the report;
• costs associated with consultations, advertising for submissions etc; and
• associated travel costs.

The total cost of the review could be expected to be in the vicinity of $500 000.

The Commonwealth Department of Health and Ageing will provide the base for the Secretariat functions and significant staff support for the Review Secretariat itself. Final details of staffing, including the appropriate level and mix of skills, can be resolved through the Steering Committee. Top of page

Conduct of the review

The Chair should seek submissions from the public through advertisements in the national press and other mechanisms considered appropriate. The Chair should also consult directly with key stakeholders on the issues covered by the review.

The review is to commence as soon as possible. The Chair should provide governments and key stakeholders with an interim report within 4 months of the commencement of the review to assist in their consideration of issues relating to pharmacy ownership, the registration of pharmacists and the location of pharmacies, and to provide an indication of the review's likely findings. The Chair should provide COAG with a final report on the review not more than 6 months after its commencement.

Attachment A

Legislation to be reviewed

1. State and Territory legislation

The relevant instruments relating to pharmacy ownership and registration of pharmacists for the States and Territories are as follows:

Western Australia, Pharmacy Act 1964, Pharmacy Act Regulations 1976
New South Wales, Pharmacy Act 1964
Victoria, Pharmacists Act 1974
South Australia, Pharmacists Act 1991
Queensland, Pharmacy Act 1976, Part 4
Tasmania, Pharmacy Act 1908, (not including those parts relating to the registration of pharmacists)
Northern Territory, Pharmacy Act 1996
Australian Capital Territory Pharmacy Act 1931

2. Commonwealth Legislation

There is one instrument involved:

Commonwealth Ministerial Determination under section 99L (1) of the National Health Act 1953: that part relating to "Approval to Supply Pharmaceutical Benefits". Top of page

Attachment B

Public Benefit Test

Competition Principles Agreement, Clause 1(3) states:

"Without limiting the matters that may be taken into account, where this Agreement calls:

for the benefits of a particular policy or course of action to be balanced against the costs of the policy or course of action;

for the merits or appropriateness of a particular policy or course of action to be determined; or

for an assessment of the most effective means of achieving a policy objective;the following matters shall, where relevant, be taken into account:

government legislation and policies relating to ecologically sustainable development;

social welfare and equity considerations, including community service obligations;

economic and regional development, including employment and investment growth;

the interests of consumers generally or a class of consumers;

the competitiveness of Australian business; and

the efficient allocation of resources."