When you have a medicine dispensed at your local pharmacy under the Pharmaceutical Benefits Scheme (PBS), two things happen. The federal government determines how much the pharmacy receives for dispensing your medicine. It also decides what you need to pay.
This so-called fee-for-service funding means pharmacies maximise their revenue if they dispense many prescriptions quickly.
Rather than fast dispensing, it would be better for patients and the health-care system if the funding model paid pharmacists for improving the use of medicines, not just for supplying them.
This is possible, according to our research published recently in the Australian Health Review. And it should be considered as part of the next Community Pharmacy Agreement, which outlines how community pharmacy is delivered over the next five years.
Read more: Explainer: what is the Community Pharmacy Agreement?
Dispensing medicine is more complex than it looks
Dispensing medications may seem simple but this can be misleading: it includes both commercial and professional functions.
Under the PBS, the pharmacy receives a handling fee and mark-up on the cost of the drug to cover the commercial cost of maintaining the pharmacy and stock.
It also receives a dispensing fee for the pharmacist’s professional activities. These include reviewing the prescription to ensure it is legal and appropriate, taking into account factors such as your age, whether you are pregnant and which medicines you’ve been prescribed before; creating a record of the dispensing; labelling the medicine; and counselling you, including providing a medicine information leaflet if needed.
Higher dispensing fees are paid for medicines needing greater levels of security (such as controlled drugs including opioids) and for medicines the pharmacist must make up (such as antibiotics in liquid form).
Read more: Health Check: is it OK to chew or crush your medicine?
But for the vast majority of PBS prescriptions, a pharmacy receives the same basic dispensing fee, currently A$7.39.
If you have a medicine dispensed for the first time, if it has a complicated dose, or it carries particular risks such as side effects or interactions, a pharmacist is professionally obliged to provide counselling matched to the risk. The more detailed the counselling, the greater the time needed.
However, at present, the dispensing fee to the pharmacy does not change depending on the level of counselling you need. Indeed, the current funding model is a disincentive for the pharmacist to spend time with you explaining your medicine. That’s because the longer they spend counselling, the fewer prescriptions they can dispense, and the fewer dispensing fees they receive.
What could we do better?
Performance-based funding, in which payment is adjusted in recognition of the efforts of the service provider or the outcomes of the service delivered, is becoming more common in health care and can correct some of the volume-related issues mentioned above.
It’s already being used in Australia. For instance, GPs are paid a Practice Incentives Program (PIP) to encourage improvements in services in areas such as asthma and Indigenous health.
However, performance-based funding has yet to be used for pharmacists’ dispensing in Australia.
We propose dispensing fees should be linked to the effort pharmacists make to promote improved use of medicines. This is based on the principle that counselling means people are more likely to take their medications as prescribed, which improves their health.
In other words, pharmacists would receive higher dispensing fees when more counselling is required or if counselling leads to patients taking their medications as prescribed.
Dispensing fees could be linked to the actual time taken to dispense a prescription: the longer the time, the higher the fee. The time taken would depend on the nature of the drug; the complexity of the patient’s treatment; recent changes in the patient’s health status or other medicines that need to be taken into account; consultation with the prescribing doctor; and the level of advice and education provided.
A blended payment model could include a fee-for-service payment for commercial processes and a performance-linked payment for professional functions.
The most experience with performance-based payments to pharmacy is in the United States, where evidence is developing of patients taking their medicine as prescribed and lower total health-care costs.
In England, the government’s Pharmacy Quality Scheme is similar to the Australian Practice Incentives Program for GPs. It funds improved performance in areas such as monitoring use of certain drugs and patient safety.
There is some concern about performance-linked payments. Performance targets need to be achievable without being onerous. And performance needs to be clearly linked to the payment being made, but not if other services suffer.
Incentives could apply to you too
Cost is a barrier to some people taking their medicines with over 7% of Australians delaying or not having prescriptions dispensed due to cost.
However, there is currently no financial incentive for you to have a generic (non-branded) medicine dispensed, which would save on PBS expenditure. So it makes sense for generic medicines to be a lower cost to you.
Read more: Health Check: how do generic medicines compare with the big brands?
There is also currently no financial incentive for you to take your medicine as prescribed, which would likely improve your health and save the health budget in the long run. We are not aware of any country varying patient charges based upon this, although there are ways of monitoring if people take their medicines as directed.
However, countries such as New Zealand and the United Kingdom have lower or no patient prescription charges, minimising costs as a barrier to patients taking their medicine.
What would need to happen?
Dispensing a prescription should be an invitation for the pharmacist to interact with you and help you with advice on the effective and appropriate use of your medicine. At present, there is no incentive, other than professionalism, for pharmacists to add such value.
The proposed changes would require a major restructure to the funding of dispensing to provide incentives that are equitable and transparent and that did not adversely affect disadvantaged, rural and Indigenous people.
There would need to be agreement on reliable and valid performance measures and reliable information systems.
However, funding based on a professional service model rather than a dispensing volume model would support your pharmacist to provide greater benefit to you and the health-care system.