As part of the new arrangements (including mark-ups) for wholesalers under the Fourth Guild/Government Agreement, the Community Service Obligation (CSO) Funding Pool has been established. One of the objectives of the fund, which commences operation on 1 July 2006, is to “ensure that people continue to receive timely access, through their community pharmacy, to the full range of Pharmaceutical Benefits Scheme (PBS) medicines”. The CSO Funding Pool is set at $149 million for the coming financial year and will be annually indexed (in line with the pharmacist dispensing fee). This funding will be made available to eligible wholesalers who meet the requirements set out in the guidelines.
All interested organisations are required to respond to an “Invitation to Apply (ITA) for eligibility to access the CSO Funding Pool”. Responses must be submitted no later than 23 June 2006.
As the funding pool contains two separate allocations, $5 million for the State based Funding Pool and $144 for the National CSO Funding Pool, organisations can apply to become CSO Distributors for the purpose of either the National CSO Funding Pool or the State based CSO Funding Pool, however distributors cannot access both Funding Pools simultaneously.
To be eligible to participate in the CSO Funding Pool, applicants must satisfy, and continue to satisfy:
- the CSO Compliance Requirements; and
- the CSO Service Standards.
To become a CSO Distributor, approved applicants are required to enter into and execute a deed with the Commonwealth Government.
The applicant must show its capacity to enter into a deed with the Commonwealth as a single entity. This requirement, however, does not prohibit the applicant from using other entities to assist in meeting their obligations under the deed (i.e. there is the ability to “outsource” certain functions).
Applicants must ensure that the quality of all PBS medicines supplied to community pharmacists is maintained, including holding all necessary licenses.
Applicants must provide community pharmacists with a single communication point for the purposes of ordering, answering queries and receiving information. They must also have sufficient financial capacity to meet CSO Standards and have access to established infrastructure.
Once an applicant commences as a CSO Distributor, they must meet the CSO Service Standards. These Standards require a CSO Distributor to:
- supply any community pharmacy within their CSO jurisdiction;
- supply any brand of any PBS medicine on request;
- maintain specified stocks of PBS medicines;
- supply PBS medicines at or below the approved price to pharmacists; and
- supply PBS medicines within 24 hours of request; and to make available a daily delivery service to community pharmacies within a distributor’s jurisdiction as part of their standard delivery infrastructure.
If an applicant has operated a full line pharmaceutical wholesale service for more than 12 months, they must also:
- demonstrate that they supply low volume PBS items in line with the industry average; and
- demonstrate that they supply to rural and remote pharmacies in line with the industry average.
Applicants who have not operated a full line pharmaceutical wholesale service for more than 12 months must show their capacity to fulfil requirements 6 and 7 by submitting a business plan outlining how this will be achieved over the 12 month period.
To supply any community pharmacy within their CSO jurisdiction
Supply to rural or remote pharmacies within a distributor’s jurisdiction must not be more than 10% below the industry average for that yearly period.
To supply any brand of PBS medicine (including any low volume PBS medicines)
If certain PBS medicines are not available to the distributor due to an exclusive supply arrangement or because the manufacturer is out of stock, this requirement will not apply to those particular medicines.
To maintain specified stocks of PBS medicines
At least stock of one brand of every PBS medicine must be held by the distributor. If the PBS medicine is multi-branded, the distributor must hold stock of at least one innovator brand and two additional brands which are benchmark priced.
To supply PBS medicines at or below the approved price to pharmacists
An ability by the distributor to supply any PBS medicine, in any quantity, at or below the approved price to pharmacists is required.
To supply PBS medicines timely
Distributors must be able to supply PBS medicine to any community pharmacy within their CSO jurisdiction within 24 hours from the regular order cut off time. Days on which the community pharmacy is closed would not count towards this 24 hour period.
The Department of Health and Ageing has outsourced the administration of the CSO Funding Pool. The relevant agency will assess payment claims made by CSO distributors and allocate the appropriate funding, ensure distributors comply with requirements and standards, implement a dispute resolution system for complaints made by pharmacists and CSO Distributors and provide a “Help Desk” service for CSO Distributors.
CSO Distributors will be paid monthly in arrears. The amounts payable to each Distributor, whether a National or State based CSO distributor, will be based on the proportion of the distributor’s sales of PBS medicine compared to the total sales volume of PBS medicines.
The CSO Funding Pool will be reviewed by the Administration Agency following the first year of operation.
For further information, please contact Damien Wurzel on (03) 9608 2288 or d.wurzel@cornwalls.com.au or Catherine Stribley on (03) 9608 2143 or c.stribley@cornwalls.com.au
