Navigating PBS approval: understanding requirements for your pharmacy

By Mitchell Stein, Peter Brownless and Allie Marshall

Introduction

Pharmaceutical benefits are supplied by pharmacists approved under section 90 of the National Health Act 1953 (National Health Act).[1]Pharmacists must meet Pharmaceutical Benefits Schedule (PBS) requirements when claiming for the supply of PBS medications, including being pre-approved to supply those medications. Both a pharmacist and a specific pharmacy location must be approved.

The Commonwealth Department of Health and Aged Care (Department) administers the PBS regime. We’ve recently noticed several proprietors challenged by the Department in relation to approval for PBS entitlements. So, it’s a good time to review the requirements for PBS entitlements under the National Health Act.

Regulatory framework

The PBS and Pharmacy Location Rules are governed at the Commonwealth level.

Under section 90 of the National Health Act, a pharmacist can only supply pharmaceutical benefits from ‘approved premises‘. To obtain approval, a pharmacist must submit a valid application to the Department, which is then referred to the Australian Community Pharmacy Authority (ACPA) for consideration.

The Secretary of the Department will generally only approve a pharmacist and pharmacy premises if ACPA has recommended approval, and the pharmacist is permitted under relevant state or territory laws to carry on business as a pharmacist.

Importantly, an approval is issued not only for a specific pharmacist (or pharmacists, if in partnership), but also for the supply of medications from a specific premises. This is outlined in section 9 of the National Health (Pharmaceutical Benefits)(Conditions of approval for approved pharmacist) Determination 2017 (Determination), which provides that a claim for pharmaceutical benefits cannot be made:

• unless it was supplied at or from approved premises;
• if the pharmaceutical benefit was never at the approved premises; or
• unless the pharmacist, or an agent of the pharmacist, was present at the approved premises for the pharmacist at the time the pharmaceutical benefit was dispensed.

If a pharmacist wants to supply pharmaceutical benefits at multiple places, they need to apply separately for each location.[2]  

Also, if a pharmacist moves to a new location, even if it’s just to a nearby tenancy in the same shopping complex, they still need to submit a new application. In these circumstances, a ‘transfer’ of the approval is required, which involves both cancelling the old approval and obtaining a new one simultaneously.

Application process

Under the National Health (Pharmaceutical Benefits) Regulations 2017, an application for approval must be made using the approved application form. There’s also an application handbook to help practitioners understand the complex requirements and make the application process easier.

To open a new pharmacy or relocate an existing pharmacy, a pharmacist applying must:

• first, determine which item of the Pharmacy Location Rules to apply under (which will provide different criteria);
• second, access the PBS Approved Suppliers Portal to complete an application form[3]; and
• third, submit documentary evidence to support the application, including evidence demonstrating compliance with the Pharmacy Location Rules.

ACPA cannot recommend approval be granted if a pharmacy does not meet the Pharmacy Location Rules and can only recommend approval if it’s satisfied all requirements have been met.

After ACPA provides a recommendation, final approval must still be given by the Department. While, in practice, the Department will follow by the recommendations of ACPA, it has discretion to form a different view.

ACPA holds meetings to discuss and consider applications 10 times each year. The timing of these meetings is published in advance, and there are strict ‘cut off’ dates for applications to be considered (ordinarily five months prior to the scheduled meeting). If an application is incomplete or further information is required, an application will be ‘deferred’ to allow an applicant to provide that information. The updated information will then either be considered at the next meeting, or upon receipt. ACPA will let the applicant know which scenario applies.

It’s important pharmacists consider the requirements and compile supporting documents for an application in advance of the proposed opening or relocation of a pharmacy, to ensure timely approval for the opening.

Common mistakes include:

• missing the ‘cut off’ date for an application to be considered prior to the proposed opening of new pharmacy premises;
• applying without a documented legal right to occupy a proposed premise at the date of application, like a signed lease agreement or a letter from the lessor indicating occupancy rights even if the lease starts later; and
• misinterpreting the relevant definitions of a ‘small shopping centre’ and a ‘large shopping centre’ for which different criteria apply.

If approved by the delegate, the Department will issue an approval number and certificate.

Outcome and review rights

If ACPA does not recommend approval, the applicant can request a review of the decision. A decision from ACPA will be accompanied by specific reasons and will outline an applicant’s rights of review.

An applicant has 28 days from notification of ACPA’s decision to seek a review in the Administrative Appeals Tribunal.

The Minister for Health also holds a discretionary power to grant approval in certain circumstances. That power may only be sought after an application has been considered by ACPA and rejected by the Department and, in practice, is exercised very sparingly.

Receiving PBS entitlements in error

If a pharmacy receives incorrect entitlements, it is liable to repay those entitlements in full to the Department. Making claims for those incorrect entitlements constitutes a contravention of the National Health Act. This could happen if there’s no valid approval in place or if, for instance, the wrong method is used to calculate compounded medications.

The Department will first request that a pharmacy complete a ‘Voluntary Repayment of Incorrect Entitlements’ form, and agree to repay either the whole amount requested, or to provide an explanation as to why all or some of the entitlements were correctly received.

If a pharmacist wants to repay a lower amount, the Department will be required to decide the correct repayable amount. Any amount determined to be repayable may also attract an ‘administrative penalty’, which is usually 20% of the total amount repayable.

The Department might take compliance action against the pharmacist by referring them to the Pharmaceutical Services Federal Committee of Inquiry (Committee) under section 144 of the National Health Act or referral for disciplinary action. A referral typically happens if the Department strongly suspects deliberate, intentional or fraudulent behaviour.

Following conclusion of an inquiry, the Committee will issue a written report to the Federal Minister for Health outlining its findings. The Minister is then authorised, under section 95 of the National Health Act, to take further steps, including issuing a reprimand, suspending or revoking a PBS approval.