End exclusive direct distribution arrangements now

If monopoly supply arrangements between manufacturers and pharmacies continue, there will be no back-ups to protect patients from a single point of failure in the PBS supply chain, the National Pharmaceutical Services Association (NPSA) has warned this week.

Speaking at the eyeforpharma conference in Sydney, NPSA Chair Mark Hooper said exclusive direct arrangements undermined government policy by restricting the supply of products to one source.

“The danger in allowing monopoly arrangements to continue is that the current supply-chain arrangements, which make sure every Australian has reliable, safe, equitable and efficient access to all medicines on the PBS, will no longer work as the government intended,” he said.

Five pharmaceutical wholesale companies are currently contracted by the federal government, through the Community Service Obligation (CSO) funding pool, to deliver PBS medicines to all consumers.

Mr Hooper said the CSO funding pool supports wholesalers in meeting the highly regulated standards, such as the distribution of all PBS products to all pharmacies – including low-volume and low-value medicines – and the distribution of the full PBS range to rural and remote postcodes, generally within 24 hours. He added that the pool is available to those who meet the wide range of standards, not just for delivery.

The NPSA, he said, has been working with the government and Department of Health towards ensuring all aspects of patient access to PBS medicines are regulated to consistent, high standards.

“The CSO isn’t about allowing individual companies to gain more control of the market,” Mr Hooper said. “It’s about securing a supply chain that works in patients’ best interests. That means ensuring all PBS-listed medicines are available to all CSO distributors at equivalent pricing.

“Any company that wants to undermine the CSO by working around its standards, or delay much-needed certainty, is not operating in the best interests of Australian patients, and should not be rewarded for doing so.

“Similarly, any company that wants to compete for the CSO funding pool should be able to register and be held to the same standards and accountability, including the supply of all 6,200 PBS products.

Mr Hooper said the passage of the Therapeutic Goods Amendment (2018 Measures No.1) Bill 2018 is welcome as it will help doctors and pharmacists minimise the impact on patients in the event of medicine shortages, but more action is needed to extinguish avoidable risks.


“Exclusive-direct supply from manufacturers to pharmacies creates a dangerous dependency on sole distribution for the medicines they carry, with no redundancy of supply,” he said. “If there is a supply interruption, for whatever reason, then patients would be potentially denied access to their medication.


“It is in patients’ interests for the government to take the logical next step in managing medicine shortages and plug this regulatory loophole by ensuring all PBS-listed medicines are made available to CSO distributors at equivalent prices.”

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