Remuneration Adjustment Mechanism for the Seventh Community Pharmacy Agreement (7CPA)

Page last updated: 1 July 2022

Introduction

Under Clause 3 of the Seventh Community Pharmacy Agreement (7CPA) (PDF 2.1MB), the Commonwealth and the Pharmacy Guild of Australia (Guild) agreed to the periodic, volume-based adjustment of certain elements of the Commonwealth Price (e.g. Administration, Handling, and Infrastructure Fee (AHI Fee)) in the circumstances specified in Appendix B of the 7CPA.

The basis for the remuneration adjustment mechanism (RAM) is to ensure stable pharmacy remuneration for dispensing Pharmaceutical Benefits when Pharmaceutical Benefits Scheme (PBS) and Repatriation Pharmaceutical Benefits Scheme (RPBS) expenditure fall short of agreed estimated levels. This mechanism is also designed to mitigate a negative impact on a Government Budget, from unexpected additional remuneration for community pharmacy when PBS and RPBS expenditure exceed estimated levels.

The Department performs calculations in accordance with Appendix B of the 7CPA as soon as possible after the end of each Assessment Period. The Assessment Periods are:

  • 1 July 2020 – 31 December 2020
  • 1 January 2021 – 31 December 2021
  • 1 January 2022 – 31 December 2022
  • 1 January 2023 – 31 December 2023

The outcome of assessments to date are detailed below.

The Department and the Guild agreed to assess the adjustment process in Appendix B of the 7CPA to consider whether it remains fit for purpose during the third Financial Year of the 7CPA (1 July 2022 to 30 June 2023).

Remuneration Adjustment Mechanism assessments

1 January 2021 – 31 December 2021

For the Second Assessment Period (1 January 2021 to 31 December 2021), it was determined that no adjustment was required to the Commonwealth Price in the 2022-23 Financial Year (commencing 1 July 2022) on the basis that the number of Actual Subsidised Prescriptions was within five (5.0) per cent above the number of Estimated Subsidised Prescriptions.

1 July 2020 – 31 December 2020

For the First Assessment Period (1 July 2020 to 31 December 2020), it was determined that no adjustment was required to the Commonwealth Price in the 2021-22 Financial Year (commencing on 1 July 2021) on the basis that the number of Actual Subsidised Prescriptions was within five (5.0) per cent above the number of Estimated Subsidised Prescriptions.