The Pharmacy Location Rules are not only about relocations and new pharmacies. There are also requirements for applications to be lodged and approved where there is to be an expansion or contraction of a pharmacy premises.

With the busiest season behind retailers for another year, pharmacy owners are considering changes to their businesses. Those changes may include changes to the pharmacy premises including possibly expanding or contracting the size of the existing pharmacy premises in which case, an application under the Pharmacy Location Rules is required.

Rule 121 of the Pharmacy Location Rules sets out the requirements Medicare must be satisfied of before approving an application for expansion or contraction. There are a number of requirements which must be met and evidence must be submitted to satisfy each requirement. Importantly:

  • the expanded/contracted premises must include space which was occupied by the premises before it was expanded or contracted;
  • a common wall is not sufficient.  There must be floor space which is part of the pharmacy premises both before and after the expansion/contraction;
  • the pharmacist must have a legal right to occupy both the existing and expanded premises and have evidence of that by way of an agreement for lease, lease or licence;
  • the expanded space must be able to be used for the purpose of operating a pharmacy. In this respect, evidence of the zoning and permitted use of the expanded space is required;
  • floor plans of both the existing premises and the expanded or contracted premises must be submitted.

Having the correct approval in place is particularly important when it comes time to sell the business. If the pharmacy premises has expanded or contracted over time, and the expansion or contraction has not been approved, it can be difficult obtaining approval for the change of ownership as the details of the premises will not match the details held by Medicare or relevant State authority. It is common for parties to be well into the transaction when this issue surfaces. An urgent expansion or contraction application is then required which can result in delays completing the transaction.

Even if there are no plans to sell the pharmacy, Medicare can become aware that the size of the pharmacy premises has changed and pharmacy owners can be asked to explain why an expansion or contraction application has not been made. Accordingly, it is very important to ensure the premises that a pharmacy business occupies is approved and that Medicare and the relevant State authority approve any change to the area of the premises.

The majority of applications for approval of an expansion or contraction are handled at the State level of Medicare and are not required to be considered by the Australian Community Pharmacy Authority. This means there are no cut-off dates by which applications must be submitted for consideration and the outcome of the applications is usually received quicker than other applications under the Pharmacy Location Rules.

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