Pharmacy Location Rules considered by the Full Federal Court

29 February 2016

On 3 February 2016 the Full Federal Court handed down its decision in Assarapin v. Australian Community Pharmacy Authority. 1

Read the full case note here

The case concerned the Pharmacy Location Rules which prescribe where a pharmacy dispensing PBS medicines can be located (Rules). The Rules have been retained in the most recent Community Pharmacy Agreement entered into between the Commonwealth and the Pharmacy Guild of Australia.

The Court had to consider, in particular, whether the Australian Community Pharmacy Authority (ACPA) had correctly applied the Rules in circumstances where a pharmacist (Mr Lin) sought approval for a new pharmacy to be located only 210 metres from the appellants’ (Mr Assarapin and Ms Belegrinos) existing pharmacy. Mr Lin’s existing pharmacy was located in a Westfield shopping centre, the demolition of which prompted Mr Lin to seek approval for a new pharmacy at another location.

The applicants contended that the Rules required Mr Lin’s new pharmacy to be located not less than 500 metres from the location of their existing pharmacy. The question ultimately turned on whether a demolished shopping centre was a ‘facility’ under the Rules.

The Court held that ACPA had correctly applied the Pharmacy Location Rules in determining that a demolished shopping centre was not a ‘facility’ under the Rules. Accordingly, Mr Lin could, applying the Rules, establish his new pharmacy within 1 kilometre of the location of the demolished shopping centre and less than 500 metres from the appellants’ existing pharmacy. The Court held that ACPA’s interpretation was consistent with the objective of the Rules which was to ‘reduce the number of existing pharmacies and regulate the approval of new pharmacies so as to reduce the costs of dispensing prescriptions by increasing the average output per pharmacy with a consequential savings for the Commonwealth’. Referring to an earlier case, the Court went on to say that ‘The relevant provisions are not concerned with minimising competition in the pharmaceutical industry but with reducing the Commonwealth’s financial burden in providing pharmaceutical benefits while maintaining an acceptable level of community service’.

A number of government reviews have recommended that the Pharmacy Location Rules either be relaxed or abolished entirely — on the grounds they are anti-competitive and unnecessary. Most recently the Harper Report (March 2015) recommended that access to medicine could be secured by less anti-competitive mechanisms such as tendering for the provision of pharmacy services in underserved locations and/or by funding through a community service obligation.

1. [2016] FCAFC 9.

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