60 day dispensing – What you need to know (including how it impacts aged care)

What is the new 60-day dispensing measure?

Earlier this year, the Federal Government has announced a budget measure to allow GPs to prescribe 60 days of medications for eligible patients instead of the usual 30 days. This option will be available from September 2023 for many of the long-term regular medicines people take for chronic disease such as diabetes, heart disease, high cholesterol, chronic depression and many other conditions. More information on PBS website here.

In effect, this change means that the pharmacy will supply two months of medications for the price of one. The pharmacy will receive a single government dispensing fee for the double quantity of medications, and patients will pay a single co-payment - so over the course of a year this is effectively a 50% reduction in revenue to pharmacy for supplying these medications.

This change in supply arrangements will have a significant impact on the viability of many services pharmacies provide for consumers at no, or very low cost.

Services which the government does not pay for, and has not indicated that they will pay for, including medication packing for residents of aged care facilities, daily deliveries to consumers in the community, disability services and aged care facilities, after hours emergency access to medicines in aged care facilities, access to pharmacists for advice and management of minor ailments, and extended opening hours to provide late night and public holiday access to medicines.

While the government has committed to reinvesting the savings into pharmacy services such as immunisation and opioid dependence treatment, the level of this funding and relevance for individual pharmacies is less than the potential loss in dispensing revenue and will be inconsistently distributed across the industry.

On the face of it, for consumers the 60-day medicine supply appears to offer additional convenience and cost-savings, but there are considerable flow-on effects from the change which will impact on the viability of many services which community pharmacy has provided at no, or very low cost, and introduce additional risks regarding medication safety and wastage.

Furthermore, consumers with multiple medicines including those in aged care facilities are unlikely to be better off because it will delay their access to the PBS Safety Net which offers free PBS medicines for concession card holders.

Why has the Government introduced these changes?

Primarily, the change to 60-day dispensing is a cost saving measure for both government and consumers following the overspend on health expenditure in recent years, including on pharmaceuticals.

The quoted savings over the next 4 years is calculated to be $3.6 billion. This is made up of:

• $1.6 billion for consumers through reduced copayments to pharmacies, and
• $1.2 billion for government through reduced dispensing fees to pharmacies.

Secondly, the government is anticipating this measure will reduce the frequency of visits to GPs for renewal of prescriptions, enabling GPs to streamline their workload by prescribing 12 months’ worth of medicine instead of the usual 6 months.

Doesn't the Government already have concessional options for consumers?

Yes. The government already has concessional arrangements in place, with a reduced co-payment for pensioners and people with health care cards ($7.30 instead of $30).

There is also the Pharmaceutical Benefit Safety Net which caps the amount a consumer spends on their medicines per year. Once a concessional consumer reaches the Safety Net, all further medicines are free for the rest of the year.

The 60-day dispensing measure offers no additional benefit once a consumer reaches the PBS Safety Net, and in fact it will delay the time it takes for a consumer to reach it.

In aged care settings, approximately 90% of residents reach the Safety Net each year.

When will the measure commence?

The 60-day dispensing measure will become available from 1 September 2023. The list of 325 eligible medicines has been released, and they will be introduced in 3 tranches commencing with 92 medicines this year. Subsequent tranches will be introduced in the following 12 months.

What medicines are included?

The 60-day dispensing measure is not an option for all medicines.

It will be applied to 325 commonly prescribed medications for various chronic diseases including heart disease, lung disease, blood pressure, cholesterol, diabetes, musculoskeletal conditions, immune-related diseases and depression.

It is important to note that many medicines are included only when used for certain indications, and the decision to provide a patient with the increased quantity must be made by the GP at time of prescribing – a pharmacist cannot modify the quantity at point of dispensing.

The full list of included medicines is available online here.

Medicines that are not listed remain capped at the current PBS quantity.

Non-PBS medicines, including those funded privately or purchased over the counter (without a prescription) are not included.

Will consumers benefit from this measure?

The benefit for individual consumers from this measure is not clear-cut and depends on their own clinical and financial circumstances.

Before requesting prescriptions for 60-day quantities, consumers must consider various factors such as whether they reach their annual PBS Safety Net, the range of specific medicines they take (not all medicines are included), the stability of their health care needs, and the safety of being in possession of larger quantities of medications.

Will prescribers benefit from this measure?

The benefit for prescribers also depends on numerous factors, including clinical and safety considerations of the individual consumer, and the need or likelihood that they will see them for subsequent appointments in the next 12 months.

In the aged care setting, where National Residential Medication Charts (NRMC) are in place for PBS prescriptions, each chart must be reviewed at least every 4 months by prescribers. So, there is little to gain for them from prescribing the increased quantity to last 12 months.

What impact will this measure have on pharmacies?

The impact on pharmacies is anticipated to be significant. Even on the government’s own Impact Assessment they report that:

“The community pharmacy sector will be significantly impacted by this proposal.”

Within this report, the calculated average reduction in gross profit revenue to pharmacy of $158,000 per annum, noting there is significant variation expected due to different profiles of pharmacies and the types of prescriptions dispensed in different demographic areas.

Pharmacies are small, independent businesses owned by primary care practitioners, with a turnover usually of under $5 million. A reduction in gross revenue at this level translates to about 20-40% reduction in net profit for the average pharmacy.

While some service-based funding offsets for this revenue reduction have been, or will be introduced by the government, all pharmacies will be impacted by this significant change in income. Many will be forced to review staffing levels, opening hours and consider fees for services such as medication packing, deliveries, health services and afterhours access.

How does pharmacy remuneration work?

In order to understand how the impact of the 60-day dispensing measure, it is important to have an understanding of how pharmacies are paid for dispensing PBS medicines.

Funding for pharmacy is quite complicated, but in basic terms, for every PBS medicine dispensed the pharmacy receives:

• A co-payment contribution from the patient ($7.30 for concession or $30 for general patients in 2023)
• Payment from the government to include a dispensing fee ($8.37 after 1 July CPI increase) plus an amount to cover the cost of drug and other minor fees which adds up to the subsidised gap between patient copayment and total cost of the PBS item.

Private prescriptions, or items that are valued below the general copayment are paid for in full by the patient.

Once a patient or family group has paid up to their allocated annual ‘Safety Net’ their copayment amounts reduce to $0 for concession card holders and $7.30 for general patients. This means, concession card holders receive all prescriptions for free for the remainder of the calendar year once they reach the safety net.

PBS Safety Net values (2023 calendar year):

• Concessional patient: $262.80 (equal to 36 prescriptions, or over 3 per month)
• General patient: $1563.50

After paying for the cost of the medicine, the dispensing fee along with the patient co-payment contributes to the gross profit margin for the business.

The gross profit margin is used by pharmacy to fund the high degree of accessibility of pharmacists in the community, for which there is no, or very minimal government funding available, and limited scope to introduce customer charges.

• It enables many pharmacies to maintain later opening hours including weekends.
• It funds the provision of delivery services, usually free or low cost, to many customers living in the community – this was a highly valued service during the Covid-19 pandemic.
• It helps fund the packing of medicines into Dose Administration Aids which are a recognised medication safety and convenience measure helping patients with chronic health conditions – noting the government and consumers pay a small contribution for this service, but there are limitations and rules surrounding this contribution and it is not available for aged care residents.
• It funds the access to pharmacists for many in-store health services such as availability to discuss medication and health conditions, helping patients with treating minor ailments, signing of official documents for customers, health screening services such as blood pressure, body mass and glucose testing.

What is PBS Safety Net?

PBS Safety Net is a long-standing cost containment threshold for consumers and families taking multiple medicines. For consumers on concession cards, once they have had 36 medicines dispensed in a calendar year (three or more per month), they pay nothing further for their PBS medicines for the remainder of the year.

In aged care settings, pooled data from Healthy Collective partner facilities indicates the median number of regular packed medicines per resident is 7 (standard deviation of 3, n=5229). This means that the vast majority (85% or more) take 4 or more medications – and therefore will reach the PBS Safety Net each year.

This is backed up by data published by Choice Aged Care, an independent clinical pharmacist service provider for aged care, which suggests that 92.1% of residents will reach the PBS Safety Net each year and therefore will not benefit further from the 60-day dispensing measure.

Aged care specific information:

What changes will there be for services for aged care residents and facilities?

With this measure prompting a review of service fees and access levels in the community setting, pharmacies looking after aged care are concerned that it will also have an impact on their ability to maintain the level of service they currently provide, and which aged care residents are accustomed to receiving.

All medication supply services for aged care are funded through the profit margin received from dispensing PBS medicines and customer sales. There is no government funding to pharmacy specifically for aged care medication packing, profile management and deliveries (read below for further explanation on pharmacy remuneration for aged care).

With this in mind, the Healthy Collective and our pharmacy partners are closely monitoring how the 60-day dispensing measure will be implemented for aged care residents. At time of writing, there is no distinction for aged care residents included in the measure, and there is no further funding or compensation targeted towards services for aged care. Assuming this remains the case, we anticipate that there will be an impact for aged care residents, although the utilisation of National Residential Medication Charts may enable gradual introduction. Depending on the uptake by prescribers, residents and families we are hopeful that service impact may be able to be managed through meaningful conversation and clear information.

Strategies that Healthy Collective and our pharmacy partners are likely to introduce to manage the impact of the 60-day dispensing measure include:

• Providing information for consumers, GPs and facility staff regarding the measure and how to minimise the impact on current service levels.
• Encouraging the continuation of current 30-day dispensing arrangements by residents and GPs, particularly for the vast majority of residents who reach the PBS Safety Net each year (for whom there is no financial advantage).
• Mandating, wherever possible, the use of emailed accounts and direct debit arrangements for payments, and the introduction of account fees for late payments, printing and postage.
• Increasing awareness of the value of the services provided for residents beyond the dispensing and sale of medicines – including daily deliveries, medication packing and afterhours access to medicines.

Analysis of our aged care dispensing data suggests that over 85% of residents will reach the PBS Safety Net each year, meaning this 60-day dispensing measure will delay the time it takes for them to receive free medication.

If residents maintain their current 30-day dispensing arrangements it supports the continued viability of pharmacy services at no, or very low, cost to residents.

How does pharmacy funding for aged care facilities work?

Medicine supply services for aged care facilities is complex, with a high degree of accuracy, quality and commercial investment expected in aged care pharmacy service contracts.

Services beyond medicine dispensing and supply include medication packing into Dose Administration Aids, management of prescriptions and medication charts, software costs, delivery fees, responding to daily orders and changes and other services provided by the contracted community pharmacy are paid for through the gross profit margin from dispensing a medication.

Pharmacy does not receive any additional funding from the government specifically for medicine supply or packing services to aged care facilities beyond the standard PBS medicine dispensing fees. Furthermore, trends in the aged care pharmacy services market in recent decades have led to pharmacies not charging facilities, or residents, for these services which means they are often provided for very minimal financial return.

Pharmacies with a focus on aged care services may be able to utilise volume to scale up and fund services holistically, but there are some important points of reflection regarding this:

• There is considerable variation in the number and type medicines each resident receives, yet the level of service provided for each is the same. This means that residents on very few medicines are having the cost of the pharmacy service funded by residents on larger quantities of medicines.
• The changing clinical acuity of aged care residents, particularly with a focus on palliative care, frailty and dementia mean that responsiveness and community engagement is becoming increasingly valued. A local pharmacy operator is better positioned to meet this expectation, but that minimises capacity to build volume.
• For providers in rural and regional settings, and those of smaller size, they are compromised in how they can support volume to pharmacy and should not be penalised at service level because of this.

Government funding exists for the following pharmacy services for aged care:

• Residential Medication Management Review (RMMR) services – for a pharmacist to attend an RACF to review a patient’s prescribed medications in consultation with their GP.
• Quality Use of Medicine (QUM) services – for a pharmacist to provide guidance on the optimal use of medications in the facility, attend Medication Advisory Committee meetings, provide clinical education and assist with evaluation of medication usage.

However, these services are specifically provided outside of the medication supply arrangements, and in most cases the funded provider is an entirely separate business that is not involved in medicine dispensing activities (i.e. not a community pharmacy).

Will pharmacies introduce service fees for aged care residents?

Currently, services for aged care residents are provided at no cost, funded from the profit margin of the pharmacy. There is no government funding provided to pharmacy other than fees for dispensing medicines.

We are supportive of maintaining this arrangement, and if consumers and prescribers continue 30-day prescription quantities we are confident that it remains a sustainable path for pharmacies.

However, if residents or prescribers change to 60-day quantities, the viability of free packing, daily delivery, afterhours access and other non-dispensing services is compromised. At that point, the pharmacy may be required to introduce service fees to residents in order to maintain service level expectations.

Onsite aged care pharmacists

In 2022 the Morrison government announced a new program to improve pharmacist access in aged care - Aged Care Onsite Pharmacists.

More than 12 months on, the details of this opt-in program are still being worked through however what has been made clear is that it will replace the RMMR and QUM funding as soon as it is introduced.

While Healthy Collective and our pharmacy partners are supportive of the intentions and purpose of this program, the lack of clarity regarding how it will be implemented has led to some degree of hesitancy for pharmacies, and pharmacists, involved in services for aged care facilities. As a funding stream that is specifically intended to employ a workforce, there are legitimate concerns around where this workforce will come from, and whether the level of funding be sufficient to cover the costs of employment.

That said, we are eagerly awaiting further detail regarding the program and look forward to partnering with aged care facilities to implement the measure at an appropriate time.

The Healthy Collective has been at the forefront of stakeholder consultation regarding this measure, providing multiple submissions to the federal government regarding aged care funding and strategies to improve quality use of medicines. As we learn more about the specifics of the new Onsite Aged Care Pharmacists program we will provide more information to our aged care and pharmacy partners.

If you would like to read a letter that was recently issued to Aged Care facilities, click here

Have you got more questions?

Contact Joe Whitehouse, Director of Healthy Care Services
Email: joseph.whitehouse@healthycareservices.com.au