Many pharmacists are wondering where they stand with the notorious pharmacy ownership rules following changes to legislation and some much-publicised cases.
Thankfully, the answer is simple – nothing has really changed.
Recently Australian pharmacy legislation had quite an administrative shake-up. First the Pharmacy Act 1974 (Vic) was repealed on 1 July 2005 to make way for the Pharmacy Practice Act 2004 (Vic). This was subsequently repealed on 1 July 2007 in favour of the Health Professions Registration Act (Vic) 2005 (Vic Act). Similarly, in NSW the old Pharmacy Act 1964 (NSW) was repealed and replaced with the Pharmacy Practice Act 2006 (NSW) (NSW Act) as at 25 February 2008. Despite the changes in name, and sometimes in section number, the rules in practice remain much the same.
Pharmacists in both Victoria and NSW are restricted to owning no more than five separate pharmacies and ownership restrictions stipulate, in general, that only a pharmacist can have a proprietary (under the Vic Act) or pecuniary (under the NSW Act) interest in the pharmacy business. The recent case of Attorney General for the State of NSW v Now.com.au Pty Ltd [2008] NSWSC 276 (Coles case), concerning the Coles supermarket chain and the Pharmacy Guild of Australia, is consistent with previous authority (for example, the Pham v Doan 2005 case). It has affirmed ownership rules can and will be enforced. In determining whether a person has a proprietary or pecuniary interest in the pharmacy, the Court will look to, among other things, the degree of control asserted over the business and the legal status of the interested person, considering all circumstances.
In the Coles case it was found Coles, as ultimate owner of the pharmacy operator, Sydney Drug Stores Pty Ltd (SDS), was the peak operating company of SDS and that SDS was under its control and did its bidding. It was found Coles did in fact control SDS and therefore breached the 1964 NSW Act. The concept of ‘control’ was examined. It was deemed a real level of control must be present, for example, the right to control how the business is operated and the right to receive profits, rather than the kind of power held by a shareholder in a public company (in this case, the shareholders of Coles/Wesfarmers). This is the general rule, but will not apply where a registered company, comprising pharmacists (as set out in s101(1) (b) of the Vic Act) owns the pharmacy business, in which case the shareholders must be registered pharmacists and will have (legitimate) proprietary interests.
Overall, in practice, the rules have not changed dramatically. Limits still exist on the number of pharmacies that can be owned, and in general, only pharmacists are permitted to own pharmacies. Companies may be permitted to have interests in pharmacies, but typically only where their members and directors are all registered pharmacists. Problems will and do arise where non-pharmacist "stakeholders" are involved and in assessing arrangements whereby pharmacists may be in breach of the ownership caps because of such arrangements.
For more information please contact Damien Wurzel on +61 3 9608 2288 or d.wurzel@cornwalls.com.au or Nicole Stevens-Warton on +613 9608 2264 or n.stevens-warton@cornwalls.com.au.
