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A Grattan Institute report says the Pharmacy Guild of Australia has negotiated deals that keep medicine prices and pharmacy profits high while limiting transparency and competition.
According to ABC News, the think tank’s analysis found the guild secures almost $4 billion a year in taxpayer funding through five-year “Community Pharmacy Agreements” negotiated behind closed doors, with little external scrutiny of the evidence used to set payments.
The report criticises key elements of the funding and regulatory system. It says dispensing fees, roughly $9 for an average medicine, are not based on verified costs because efforts to establish the real cost of dispensing have been blocked by the guild. It also flags the “allowable additional patient charge” of $2.80 on some medicines and describes such fees as “unjustified”. The report notes pharmacies are discouraged from offering discretionary discounts on some medicines and that a $1 discount available over the last decade will end by 2029 — a discount that saved patients about $48 million in 2022–23.
The Pharmacy Guild rejects the report’s conclusions. Guild vice president Simon Blacker said the agreements reflect the role pharmacies play and the services they provide, such as vaccination programs and chronic disease support, and help maintain a network of more than 6,000 community pharmacies. The guild also cited its campaign for a reduction in the Pharmaceutical Benefits Scheme co-payment last year, and said rising operating costs and the range of services covered by fees were not adequately acknowledged by the report.
The report also targets location rules that generally require a new pharmacy to be at least 10 kilometres from an existing one, saying those rules shield established pharmacies from competition. Grattan recommends the government instead provide targeted workforce incentives and rural subsidies to ensure access in remote areas without constraining competition across the whole sector.
Why this matters: the report links the structure of pharmacy funding and location restrictions to outcomes that affect taxpayers, patient out-of-pocket costs, the availability of discounts, and where pharmacies operate — particularly in rural and urban communities.
What happens next: the Grattan Institute recommends abolishing Community Pharmacy Agreements by 2029 when the current deal expires; if the government does not do so, it recommends including pharmacists and patients in negotiations and having the Independent Health and Aged Care Pricing Authority set funding rates. Health Minister Mark Butler would not be drawn on whether the government will consider the report’s recommendations, saying the current agreement involved engagement with stakeholder organisations.
Related sections: General | Australia/استراليا | Australian Capital Territory | Economy/اقتصاد | Social/إجتماعية
