A new Grattan Institute report says Australia’s pharmacy policy needs a shakeup because the sector has too much power, which costs consumers. Photo: Yuri Arcurs.
The Pharmacy Guild of Australia is one of the nation’s most powerful lobby groups and that comes at an unacceptable cost to customers, according to a new think-tank report.
The Grattan Institute’s newly published Future pharmacy: A better deal for patients and taxpayers points out that community pharmacy policy in Australia is controlled by pharmacy owners, with the Guild negotiating pharmacy funding and policy on their behalf.
The report says those negotiations directly with the Federal Government are done in secret, with patients and taxpayers losing out to the pharmacists who are calling the shots.
Not so, says the Guild, which notes a glaring omission in the Grattan report: any mention of the Guild’s advocacy for cheaper medicines, which led to the lowest prices in decades.
Grattan’s report insists that while the sector’s profits have surged, patients continue to miss out on cheaper medicines.
“Pharmacy policy is a shakedown that needs a shakeup,” the report’s lead author and Grattan Institute health program director Peter Breadon said.
“Government spends billions on community pharmacy each year. Fairer fees and stronger competition will ensure it is run for patients, not just owners.
“Replacing bargaining with evidence, and protectionism with competition, will give patients lower prices and taxpayers better value – all while keeping community pharmacy an accessible and trusted service that Australians can rely on.”
The report states that “bad governance has led to bad deals” unless you own a pharmacy.
Patients miss out on cheaper medicines and choices about where to get them, and taxpayers pay too much.
“Dispensing fees are probably too high, and some payments aren’t justified at all,” it states.
“If the number of scripts falls below a predicted level, government has to pay up anyway, as if the predicted level was met.
“Unique regulatory protections dictate who can own pharmacies and where they can be set up.
“For most scripts, discounts are being banned or discouraged by financial penalties. Meanwhile, a discretionary surcharge is allowed on many scripts.
“All these rules choke off competition that would improve choice, increase opening hours, and cut prices.”
The report says skilled and trusted pharmacists should provide more types of care, but medication checks and dose-administration aids are poorly targeted or overpriced, prompting blunt caps on their growth.
“For new services, dozens of trials have been too weak to prove they are cost-effective, leaving the sector in a purgatory of fragmented state programs,” it states.
The institute says that pharmacy policy in Australia is being Americanised and disadvantages those living in rural areas.
Pharmacy Guild national vice president Simon Blacker said neither claim was true.
“Australia’s 6000 community pharmacies play an essential role in ensuring medicine access, advice and health services,” he said.
“Increasingly, specially trained pharmacists can examine, diagnose and treat a range of everyday and long-term health conditions – this should be underpinned by a nationally consistent prescribing framework.
“The Grattan report’s analysis of pharmacy regulation misses a fundamental reality. These measures exist to ensure Australians have equitable access to medicines and pharmacy services regardless of where they live.
“In more than 330 regional, rural and remote towns, community pharmacy is the only primary healthcare destination.
“Removing these patient protections would not create more access to care – it would risk concentrating pharmacies in the most commercially attractive locations while leaving vulnerable communities with fewer healthcare options.
“The Guild has been a leading advocate for affordable medicine. Last year, working with the government to make the second-only cut to the co-pay in PBS history. In January 2026, the general co-payment was reduced to $25 – the lowest level since 2004.”
The doctor-controlled Australian Medical Association (another powerful lobby group and no friend of the Pharmacy Guild) welcomed the Grattan report, describing it as a reminder of the “need for urgent reform” in the pharmacy sector – including scrapping outdated and anti-competitive pharmacy location rules and allowing discounting.
AMA president Danielle McMullen said the AMA had long advocated for many of the reforms contained in the report.
“We know that archaic pharmacy location rules restrict patients’ access to cheaper medicines and pharmaceutical services,” Dr McMullen said.
“The restrictions on pharmacy ownership and location are anti-competitive and undermine patients’ access to medicines and services. They mean Australians pay more for medicines than they need to, and they do not guarantee supply or safety for Australian patients.
“The AMA has also long had issues with the Community Pharmacy Agreement (CPA), including a lack of transparency on how the agreements are negotiated.
“These agreements continue to put the interests of pharmacy owners before patients, with several government reports also demonstrating that they lack transparency and accountability.
“It’s quite a contrast to the public process around hospital pricing, Medicare pricing, private health premium increases, aged care reforms — you name it.”
The Grattan report recommends a multi-pronged approach for change, which includes no more backroom deals; resetting dispensing fees; phasing out restrictions on discounting medicines; scrapping location and ownership rules immediately; and the government should fund pharmacists in GP clinics.
Original Article published by Chris Johnson on Region Canberra.
