Dec 03

Insolvent pharmacy business? Recent amendments offer relief to rural patients requiring PBS medicines

Each year approximately 20 pharmacy businesses are formally declared insolvent.   Although this is a relatively small number compared to the total number of Australian companies that go into external administration (approximately 8000 per annum) the impact on vulnerable communities, particularly regional centres, has the potential to be devastating.

Until recently, external administrators or trustees in bankruptcy of insolvent pharmacy businesses, have not been able to continue to supply Pharmaceutical Benefits Scheme (PBS) medicines to patients while administering the winding up proceedings of the business.   The authority to dispense PBS medicines did not, as a matter of law, pass to them upon their appointment as administrators.

Recent amendments brought about by the National Health Amendment (Pharmaceutical Benefits) Bill 2019 (Cth) have been passed to redress this shortcoming and ensure continuity of community access to pharmaceutical products under the PBS, when businesses supplying them have been formally declared insolvent.  The National Health Act 1953 (Cth) (the Act), effective as of 2 December 2019, enables external administrators or trustees in bankruptcy of a pharmacy business, to make an application seeking permission from the Department of Health to continue to supply PBS medicines using the existing pharmacist’s existing approval number. Such an application must be made within 10 business days of either:

  • the trustee becoming the trustee of the estate of the bankrupt individual;
  • the first day on which there was a trustee of the estate of each bankrupt partner in the partnership; or
  • the day the applicant became the external administrator.

If the application is granted, the external administrator will be deemed an ‘approved pharmacist’ for the purpose of supplying PBS medicines from the premises from which that pharmacy business had been operating. Such an ‘approved pharmacist’ will, pursuant to the newly inserted s 91B of the Act, be lawfully permitted to continue to dispense PBS medicines from those premises.

The newly introduced regime for dealing with applications made by an external administrator or trustees in bankruptcy in these circumstances is a significant advancement for recipients of PBS medicines, particularly in vulnerable regional areas.

S&A Law has specialist expertise in pharmaceutical law and insolvency Law.

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