Get to know the 7th Community Pharmacy Agreement

 

The 7th Community Pharmacy Agreement signed by the Commonwealth, the Pharmacy Guild of Australia and for the first time the Pharmaceutical Society of Australia, commenced on 1 July 2020, and be in place until 30 June 2025.

With three signatories (the Commonwealth, the Pharmacy Guild of Australia and the Pharmaceutical Society of Australia) the 7CPA is structured in three parts:

  • PART 1: (the Commonwealth and the Guild);
  • PART 2: (the Commonwealth and the PSA);
  • PART 3: (the Commonwealth, the Guild and the PSA).

 

PART 1

The first part of the agreement deals with matters related to the:

  • Commonwealth Price;
  • Community Service Obligation;
  • Community Pharmacy Programs.

 

There are also a number of other arrangements in Part 1 including the intent to enhance the Closing the Gap – PBS Copayment Measure and to support future flexibility in the agreement through new or enhanced community pharmacy initiatives and incentives (e.g. particularly in areas such as aged care; mental health; e-prescribing). There is also a commitment to harmonisation of pharmacist vaccinations across the country.

 

PART 2

The second part of the agreement deals with the professional practice of pharmacists in Australia. It recognizes the PSA as the national peak body for pharmacists in Australia and the custodian of the Code of Ethics, National Competency Standards, Professional Practice Standards, and practice guidelines governing professional practice. It also articulates the role of PSA in the design, implementation and evaluation of Community Pharmacy Programs.

 

PART 3

The third part of the agreement deals largely with the governance arrangements and other general matters.

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Under the 7CPA, remuneration and funding of Approved Pharmacists and others in the pharmaceutical supply chain is estimated to be $25.3 billion of the term of the agreement. This comprises:

  • Commonwealth contributions of $15.85 billion; and
  • Patient contributions of $9.45 billion.

 

The following table sets out components of 7CPA remuneration and funding, and includes details of the contributions expected to be made by the Commonwealth and patients during the term of the agreement:

Component Contributor $million
(estimated)
Pharmacy remuneration for the dispensing of Pharmaceutical Benefits that are Commonwealth subsidised, including dispensing fee, Administration Handling and Infrastructure Fee and Dangerous Drug fee Commonwealth $11,757
Patient $2,177
Remuneration for wholesalers to hold and deliver subsidised Pharmaceutical Benefits to Approved Pharmacists (excluding the Community Service Obligation) Commonwealth $1,746
Patient $320
Pharmacy remuneration for the dispensing of Pharmaceutical Benefits that are not Commonwealth subsidised*, including wholesaler remuneration, dispensing fee, Administration Handling and Infrastructure Fee and Dangerous Drug fee Commonwealth N/A
Patient $6,954
Community Pharmacy Programs Commonwealth $1,200
Patient As set under the Community Pharmacy Programs
Community Service Obligation funding Commonwealth $1,083
Patient N/A
Fees for Community Service Obligation distributors to distribute National Diabetes Services Scheme products Commonwealth $33
Patient N/A
Fees for pharmacy to distribute National Diabetes Services Scheme products Commonwealth $33
Patient No additional patient charge
Total[1] Commonwealth $15,852
Patient $9,451
Total $25,303

*Note: the price that patients pay for prescriptions that are not Commonwealth subsidised may be subject to discretionary discounting and the application of additional allowable fees by Approved Pharmacists. Accordingly, total remuneration for dispensing PBS medicines where the Commonwealth does not subsidise the cost to the patient of the medicine is in no way assured by the Commonwealth, including under clause 3 and Appendix B.

The components of the Commonwealth Price that apply under 7CPA are detailed below:

Payment type Value of payment
wholesale mark-up[2][3] (for Ready-Prepared Pharmaceutical Benefits) Where the Ex-Manufacturer Price is up to and including $5.50 $0.41 per dispense
Where the Ex-Manufacturer Price is over $5.50 and up to and including $720 7.52 per cent of the Ex-Manufacturer Price per dispense
Where the Ex-Manufacturer Price is over $720 $4.28 per dispense of Maximum Quantity
Administration, Handling and Infrastructure Fee[4] Tier One AHI Fee For a Listed Brand with a Price to Pharmacists for Maximum Quantity less than $100 $4.28 per dispense of Maximum Quantity
Tier Two AHI Fee For a Listed Brand with a Price to Pharmacists for Maximum Quantity from $100 and up to and including $2,000 Tier One AHI Fee plus 5% of the amount by which the Price to Pharmacists for Maximum Quantity exceeds $100, per dispense of Maximum Quantity
Tier Three AHI Fee For a Listed Brand with a Price to Pharmacists for Maximum Quantity over $2,000 Tier One AHI Fee and $95 per dispense of Maximum Quantity

 

Payment type Value of payment
dispensing fee (for Ready-Prepared Pharmaceutical Benefits) $7.74 per dispense
dispensing fee (for Extemporaneously-Prepared Pharmaceutical Benefits) Dispensing fee for Ready-Prepared Pharmaceutical Benefits, plus $2.04, per dispense
Dangerous Drug fee $4.80 per Dangerous Drug dispensed

[1] The total excludes remuneration when community pharmacies dispense medicines under section 100 special arrangements. Chemotherapy compounding fees will be paid directly to chemotherapy compounders, who may not be Approved Suppliers.
[2] The wholesale mark-up for a Pack Quantity of a Listed Brand is calculated using the Relevant Quantity.
[3] The wholesale mark-up applying for the period from 1 July 2020 to 31 December 2020 will be the wholesale mark-up applying in the last year of the Sixth Community Pharmacy Agreement. The wholesale mark-up arrangements set out in Table 2 will commence from 1 January 2021.
[4] The AHI Fee is calculated from the per pack price with the AHI Fee applied for the Maximum Quantity proportionate to the number of packs required for the Maximum Quantity, and will be adjusted if less or more than the Maximum Quantity is supplied. Refer to the Determination for further details of the AHI Fee calculation.

Throughout the term of the 7CPA, the Commonwealth will make available up to $1.2 billion in funding for patient focused professional pharmacy programs and services. For the first year of the agreement it is intended that the below Community Pharmacy Programs will continue and be largely unchanged.

 

Continuing Community Pharmacy Programs
Medication Adherence Programs:

  • Dose Administration Aids
  • Staged Supply
Medication Management Programs

  • Home Medicines Review
  • Residential Medication Management Review
  • Quality Use of Medicines in Residential Aged Care Facilities
  • MedsCheck
  • Diabetes MedsCheck
Aboriginal and Torres Strait Islander Specific Programs

  • QUMAX/S100 Support
  • Closing The Gap PBS Copayment Measure
  • Aboriginal and Torres Strait Islander Workforce Programs
Rural Support Programs

  • Rural Pharmacy Maintenance Allowance
  • Rural Workforce Programs
eHealth

  • Electronic Prescription Fee

It is the intention of the Commonwealth to:

  • Maintain the increased investment in Community Pharmacy Programs designed to support older Australians (Home Medicines Reviews and Residential Medication Management Reviews). This is in response to recommendations from the Interim Report of the Royal Commission into Aged Care Quality and Safety;
  • Combine the Residential Medication Management Review and Quality Use of Medicines in Residential Aged Care Facilities Programs into a single Program;
  • Combine the MedsCheck and Diabetes MedsCheck Programs into a single Community Pharmacy Program;
  • Double the base cap for Dose Administration Aids during the first year of the agreement;
  • Provide uncapped access to Dose Administration Aids for Aboriginal and Torres Strait Islander people;
  • Incorporate enhancements to the Closing the Gap – PBS Copayment measure to expand the range of health professionals who can register patients and enable Aboriginal and Torres Strait Islander patients to register regardless of where they are located and their chronic disease status;
  • Transition to the Modified Monash Model from the PhARIA rural classification system and increase investment in regional, rural and remote areas through an increased investment of ten per cent in the Rural Pharmacy Maintenance allowance in the first year of the agreement.

 

In the 7CPA the Clinical Interventions and Pharmacy Trail Program have both ceased.

As co-signatory to Part 2 of the 7CPA, PSA is recognised as the national peak body for pharmacists in Australia and the custodian of the Code of Ethics, National Competency Standards Framework for Pharmacists, Professional Practice Standards, and Practice Guidelines governing the professional practice of pharmacists in Australia.

 

PSA will work with the Commonwealth in relation to the further development of the Code of Ethics and the continued maintenance of the Professional Practice Standards and relevant clinical guidelines. Implementation and support materials will be developed to support these standards an guidelines, including for new or enhanced Community Pharmacy Programs that arise throughout the term of the agreement.

The Governance of 7CPA is set out on Part 3 of the Agreement. This includes the establishment of two consultative committees:

  • The Community Pharmacy Consultation Committee
  • The Pharmacy Stakeholder Consultation Committee

 

The Community Pharmacy Consultation Committee (CPCC)

 

The Commonwealth and the Guild will establish the CPCC to enable consultation by them in relation to matters between them in the Agreement.

 

The Pharmacy Stakeholder Consultation Committee (PSCC)

 

The Commonwealth and the Guild will establish the PSCC to enable wider consultation between the Department and the broader pharmacy sector. The Guild and PSA are standing members of the PSCC and the Department may invite other stakeholders as it considers appropriate.

Resources

Download
the signed 7CPA


Download
Dispensing Fact Sheet


Download
Programs Fact Sheet


Download
Wholesalers Fact Sheet