A recent decision of the Administrative Appeals Tribunal (“Tribunal”) has provided further insight into particular elements of the requirements of Rule 136 – New pharmacy (large medical centre) of the Pharmacy Location Rules (“Rules”).

Falcon Grove Pharmacy Pty Ltd v Australian Community Pharmacy Authority and Ors [2016] AATA 978 considered an application under Rule 136. The case looked at three specific requirements of the Rule:

  1. were the proposed pharmacy premises (“Premises”) in a large medical centre;
  2. did, at all relevant times, the Falcon Grove Medical Centre (“Medical Centre”) have the required number of PBS prescribers;
  3. were the Premises and Medical Centre operated under single management.

The Applicant made an application to the Australian Community Pharmacy Authority (“ACPA”) under Rule 136 of the Rules to supply pharmaceutical benefits from Shop 14, Falcon Grove Shopping Centre. The ACPA recommended the application not be approved.

Issues

The Medical Centre leased premises at Shops 11, 12 and 13, Falcon Grove Shopping Centre from the registered owners of the land. The Medical Centre lease was for a period of 5 years, expiring on 30 June 2018.

Although the Applicant’s lease of Shop 14 in Falcon Grove Shopping Centre had the same lessor and was also for a period of 5 years, its expiry date was 30 September 2018.

On 1 September 2015, the Medical Centre and the Applicant entered into a Management Deed regarding their respective premises at Falcon Grove Shopping Centre which provided, among other things:

  1. for the purposes of the Rules, the owners of the Medical Centre and the Applicant jointly managed the Medical Centre under single management and as a whole;
  2. the Medical Centre would be managed by one or two managers working cooperatively(being a representative of the Medical Centre and a representative of the Applicant); and
  3. the management would encourage the use of the Medical Centre as a single integrated facility.

Were the proposed premises in a large medical centre?

Although the Premises were located in close proximity to the Medical Centre (which included a pathology clinic), the Premises were in a separate, freestanding building and separated from the Medical Centre by a driveway, carparks and common areas.

The Respondents submitted the Premises were not in a “large medical centre” (as defined by the Rules) because:

  1. staff and customers were required to leave the Premises to enter the Medical Centre;
  2. the Premises were in a different building to the Medical Centre;
  3. neither the Premises or the Medical Centre formed a central point for the provision of medical services.  The buildings also contained retail shops and offices;
  4. the Premises were not part of a singular continuous space nor is it contiguous with the Medical Centre.

When considering the words “in”, “medical” and “centre” in the context of their ordinary meanings, the Tribunal was satisfied the Premises were in a medical centre.

The Tribunal concluded the term “medical centre” was sufficiently broad to include the provision of pathology services, general medical practitioner services and pharmaceutical benefits in that the services all relate to the “science or practice of medicine”.

The Tribunal also concluded Shops 11 to 14 (being the Premises, the Medical Premises and pathology premises) were located “in” the one “centre”. Although the premises were located in different buildings, under different roofs and separated by a driveway, the Tribunal’s view was the buildings comprised a complex relating to the science or practice of medicine and therefore, constituted a medical centre. The Tribunal did not consider that the geographical separation of the buildings meant that the Premises were not “in” the medical centre.

Did, at all relevant times, the medical centre have the required number of PBS prescribers?

The Rules require that, at all relevant times, the number of PBS prescribers at the medical centre must be equivalent to at least 8 full time PBS prescribers of which at least 7 must be prescribing medical practitioners.

The medical practitioners at the Medical Centre included a practitioner whose practice focussed on skin medicine and another whose practice focussed on respiratory and sleep ailments. The Respondent submitted those practitioners did not provide general practice services as required by the Rules and as such, there were an insufficient number of prescribing medical practitioners (as defined by the Rules) in the Medical Centre to meet the requirements of the Rules.

The Applicant submitted all of the practitioners at the Medical Centre were prescribing medical practitioners and although there were practitioners at the Medical Centre with speciality practice areas, those practitioners still provided general practice services to patients, were available at the Medical Centre for general practice consultations and carried out duties of a general medical practitioner, even for patients who visited the medical centre for the speciality expertise.

The Tribunal considered the definition of “general practice” and concluded that all of the practitioners at the medical centre were, at all relevant times, engaged in general practice services.

Were the Premises and Medical centre operated under single management?

The definition of “single management” considered by the Tribunal is different to the definition now contained in the Pharmacy Location Rules.

Based on the previous definition, the Respondents submitted the Medical Centre was not under single management for reasons including:

  1. the Management Deed was created only for the purposes of satisfying the Rules;
  2. there was no provision in the Deed requiring the leases for the Medical Centre and the Premises to be interdependent and further, the leases were for different terms;
  3. it was the landlord, and not the owners of the Medical Centre or the Applicant, who had control over each premises;
  4. each premises were in a different building and not part of a “single integrated facility”;
  5. the footpaths and driveways between the buildings were common areas and not under the control of the medical centre or the Applicant; and
  6. the level of co-operation required between the owners of the Medical Centre and Premises was insufficient.

The Tribunal held the Medical Centre and Premises were under single management of two or more managers working cooperatively and the managers encouraged the use of the Medical Centre as a single integrated facility. The Tribunal did not consider there to be any requirement for any manager to have power, control, a right of veto or a level of interdependence from another. Rather, the Tribunal held it was only a level of cooperation that was required, and a single integrated facility could exist between more than one building with multiple tenants.

Conclusion

The Tribunal set aside the decision of the ACPA, ordered that the application be resubmitted to the Authority and recommended the Authority recommend the application for approval.

Summary

This case provides clarification on aspects of Rule 136 and in particular:

  • the position which ought to be taken where a pharmacy is not physically located in a medical centre and where there are prescribing medical practitioners in a medical centre who engaged in speciality practice areas;
  • the level of management required for the medical centre and specifically, that a landlord does not need to be involved in the management of a medical centre to meet the requirements of Rule 136.

As noted, the definition of “single management” has changed since this decision. The definition is now broader and refers only to the management categories of “marketing, maintenance and administration of the centre as a whole”. Notwithstanding, the decision in this case, particularly in relation to the meaning of “working cooperatively”, will benefit future applicants who make an application for consideration under Rule 136.

Should you have any queries or require any assistance regarding applications made under the Pharmacy Location Rules, please contact us.