Establishing or relocating a pharmacy business is rarely a straightforward process. As pharmacists would well know, these endeavours require approval under s90 of the National Health Act 1953 ("Act"). That approval isn't always easy to obtain. Applications can be refused, by the Secretary's delegate in the Department of Health ("Secretary"), for even a marginal failure to meet requirements under the Location Rules. The good news is that this isn't necessarily the end of the application process.
In certain circumstances, proprietors may wish to make an application to the Minister of Health ("Minister") to exercise the discretionary power under s90A(2) of the Act, to approve a pharmacist to supply pharmaceutical benefits (PBS) at a particular premises, and thus grant the application. This is known as a Ministerial discretion application.
Ministerial discretion applications
A Ministerial discretion application is not an alternative to applying for approval under section 90 of the Act. This process can only be pursued after an application has been considered by the Authority and rejected by the Secretary. A ministerial discretion application must be made within 30 days of receiving the Secretary's refusal.1
Upon receipt of a request to exercise ministerial discretion, the Minister must first decide whether or not to consider the request. The Minister has three months to make this decision. If the Minister decides not to consider the request, then the Secretary's decision will stand. If the Minister decides to consider the request, then they have an additional three months to make a final determination. This will either result in a decision:
- not to exercise the discretionary power, in which case the Secretary's decision will stand; or
- to exercise the discretionary power, in which case the Minister will substitute the Secretary's decision for a decision approving the pharmacist.
Pursuant to s90A(2) of the Act, the Minister may only exercise the discretion to approve a pharmacist if satisfied that:
- the Secretary's decision will result in a community being left without reasonable access to pharmaceutical benefits; and
- it is in the public interest to approve the pharmacist ("the elements").2
Thus, the Minister must be satisfied that all the elements of s90A(2) are met including that they should exercise the discretion in the circumstances.
Satisfying elements of s 90A(2)
With respect to the first element (the community being without reasonable access), the Act provides very little assistance but to define "community" and "reasonable access" to mean what "in the opinion of the Minister, constitutes a community" and what "in the opinion of the Minister, is reasonable".3 This grants the Minister power to determine what those terms mean (and do not mean) in each individual case. The challenge that arises for pharmacists is that there is no conformity on which to rely: what constitutes a community or is reasonable access in one situation isn't necessarily the same in another.
This places a burden on pharmacists to work out who exactly is their relevant community and what would reasonable access be for that community. They then have to collate a range of evidence to persuade the Minister that their definition of 'community' and 'reasonable access' is correct. This can be a painstaking process requiring acute attention to key factors and consideration of wider factors. Of course, the Minister may not agree and consider that the 'community' or 'reasonable access' are to be defined in some other way, which could adversely affect the application's prospects of success.
Notably, we have had success in arguing that the needs of a community included opioid dependent patients being served by a pharmacy where other pharmacies did not provide that service. This argument resulted in the Minister exercising his discretion to approve 5 separate pharmacies on the one day earlier this year.
With regard to the second element (public interest), the Act provides no definition or 'checklist' that pharmacists can use to establish this element. Again, pharmacists are put to the burden of trying to justify how their approval would be in the interest of the public. It is not simply enough to rely upon a petition in support of the pharmacy being approved, no matter how many signatures are gained.
In our experience, this requires reference to a range of considerations carefully extracted from geographic and demographic statistics to articulate that the public would be better off with the pharmacy being approved. It also involves an understanding of the usual arguments that the Minister will try to make as to why an approval should not be granted (for example the fact that a large proportion of households have a motor vehicle is often used by the Minister to refuse these applications for some reason).
This can be a tedious process for pharmacists who, at the same time, are trying to run their business and meet their proprietor oversite requirements.
Discretionary nature – but it can be appealed
As foreshadowed above, the Minister's decision is ultimately discretionary. Meaning that each application (or request) is considered on its own merit and the Minister is not bound by previous decisions. However, an understanding of previous decisions is useful when making an application to the Minister or in challenging a decision of the Minister in Court.
By way of example, in Freedom Pharmaceutical Pty Ltd v Minister for Health [2021] FCA 213 the Minister decided to approve a pharmacist to supply pharmaceutical benefits from a proposed premises within a shopping centre, satisfied that the requirements of s 90A(2) were met in circumstances where the community of the medical centre next door would have to leave the medical centre and travel 60 meters to the next closest pharmacy. The Minister approved a pharmacy within the medical centre.
Approximately six months later one of our clients made a similar application, which if not approved would see the community having to leave the shopping centre, which had a medical centre as part of the shopping centre and travel one kilometre to the next closest pharmacy. The Minister decided not to approve our client's application, considering that the requirements of s 90A(2) were not satisfied. Despite the two applications being similar, and the distance of travel being more burdensome in our client's circumstances, the same Minister made opposite decisions.
We appealed the Minister's decision in the Federal Court and on the eve of trial the Minister agreed to reconsider the application and ultimately approved it (a new Minister had actually been appointed during this process), a success for our client.
This wide power highlights why it is paramount for pharmacists to obtain proper advice and complete ministerial discretion applications thoroughly. This will place them in the best position for convincing the Minister to exercise the discretion. Of course, this does not guarantee approval, but it does set the pharmacist up for any court review proceedings which could eventuate should the Minister decide not to approve the application.
In our experience the best way to prepare an application to the Minister is to get legal advice right at the start when considering a potential pharmacy site that won't meet the location rules to see if a ministerial discretion application has reasonable prospects and how you can protect yourself if it ultimately fails.
If you want to discuss a potential ministerial application or if your application for approval has been rejected by the Secretary and you want to make an application for ministerial discretion under s 90A(2) of the Act or you want more information, contact Maurice Hannan, Andrew Lambros and Pyper Adsett of Bennett & Philp Lawyers for advice.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific circumstances. It is intended for information purposes only and should not be regarded as legal advice. Further professional advice should be obtained before taking action on any issue dealt with in this publication.
Footnotes
1 Section 90B(3)(a) of the Act.
2 Section 90A(2) of the Act
3 Section 90A(3) of the Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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