Suzanne Yates and Ors and Australian Community Pharmacy Authority
[2012] AATA 610
[2012] AATA 610
Division GENERAL ADMINISTRATIVE DIVISION File Number
2012/0750
Re
Suzanne Yates and Ors
APPLICANT
And
Australian Community Pharmacy Authority
RESPONDENT
DECISION
Tribunal Senior Member Bernard J McCabe
Date 27 August 2012 Place Brisbane The decision under review is set aside and a decision substituted recommending the applicant's premises be approved to supply pharmaceutical benefits.
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Senior Member Bernard J McCabe
CATCHWORDS
HEALTH AND COMMUNITY SERVICES – Pharmaceutical benefits – Approval to supply pharmaceutical benefits – catchment area – overlap of catchment area – whether proposed premises regarded as a reasonable and practical option to residents – decision under review set aside and substituted.
CASES
Issa and Australian Community Pharmacy Authority [2012] AATA 374
Newman and Australian Community Pharmacy Authority [2010] AATA 1055
Re Maryborough/Hervey Bay Friendly Society Chemists Ltd andAustralian Community Pharmacy Authority [2008] AATA 932
Strutt v Australian Community Pharmacy Authority & Ors [2006] FMCA 1245REASONS FOR DECISION
Senior Member Bernard J McCabe
11 September 2012
The outcome of this case turns on a simple question: would residents of the Highlands Reserve residential estate in Upper Coomera regard a pharmacy located at Brygon Creek as a reasonable and practical alternative for their pharmacy needs?
I gave my decision in this matter at the resumed hearing on 27 August 2012. I told the parties I was satisfied residents of Highlands Reserve would make use of the pharmacy that has already been established by the applicant at Brygon Creek, albeit that it currently operates without the approval to dispense Pharmaceutical Benefits’ Scheme (PBS) medicines. The decision under review was set aside and a decision was made in substitution that the Secretary recommend an approval be granted to the applicant’s pharmacy. I did not provide reasons at the time of the decision: I agreed to provide the decision as a matter of urgency as the applicant faced a looming commercial deadline. I said I would provide reasons as soon as possible. These are my reasons.
A PRELIMINARY ISSUE: WHAT MATERIAL IS BEFORE THE TRIBUNAL?
The Tribunal pointed out in its recent decision in Issa and Australian Community Pharmacy Authority [2012] AATA 374 that the applicant was not able to present new material to the Tribunal that was not provided to the Authority at the time the original application was lodged. Issa had only recently been delivered when this matter came on for hearing, and its significance may have been missed. The applicant tendered a good deal of new evidence in support of her application. There was no objection taken to the tender of the evidence at the time, although the respondent subsequently asked the Tribunal to consider whether the material ought to be received in light of the rule discussed in Issa. I decided it was appropriate that all of the tendered material be provided because it would assist me in my deliberations. The material included data that had only just been released from the Australian Bureau of Statistics following the recent census. It also included some of the material I referred to in my decision in Newman and Australian Community Pharmacy Authority [2010] AATA 1055 at [12]. I am satisfied the circumstances of the case warrant the introduction of the material – particularly as there was no suggestion the applicant failed to provide the material in support of her original application in an attempt to preserve a commercial advantage for herself.
BACKGROUND
The applicant is an experienced pharmacist. She has owned and operated a number of pharmacies in the area where she established the new premises in December 2010. Those other establishments had PBS approvals. She gave evidence that she anticipated there would be no difficulty in getting a PBS approval for the new Brygon Creek premises – which explains why she commenced trading from there without a PBS approval. Unfortunately for her, the approval process has not run smoothly.
The site of the pharmacy and its immediate surrounds
Brygon Creek is within the Upper Coomera area, which is located on the western side of the Pacific Motorway on the northern end of the Gold Coast. The area is growing very quickly. The recent census suggests there are many young families moving into the new residential estates nearby, like Highland Reserve. The new pharmacy is located within a small shopping precinct just off Reserve Road. The Brygon Reserve Shopping Village includes an IGA Express supermarket, a number of smaller shops, like a café and a video store, and a bank. The Gold Coast Institute of Technology, a small training provider, also has premises there.
The centre is described by the applicant’s consultant experts as “an important top-up shopping and convenience destination for surrounding residents”: exhibit one, p 201. Having visited that centre, I accept the description. Residents would not complete their weekly shop at the centre. They would probably travel to one of the other shopping centres which host a larger supermarket for that purpose. I will have more to say about that later.
The pharmacy is located in a cluster of buildings that are contiguous to the Brygon Reserve Shopping Village. That cluster of buildings includes a large medical centre. I was told there are now six doctors working within the medical centre, including four female doctors. The Coomera Community Child Health Centre is located nearby; there is an orthodontic clinic and other allied health professionals, including visiting psychologists and podiatrists within the precinct: exhibit one, p 201. There is also a large childcare centre with 325 places. A tavern complex is located within the precinct, and there is a retirement complex located within 300 metres of the centre.
The centre is adjacent to the Upper Coomera State College, a recently established school with around 3000 junior and senior students and 300 staff. It is one of the biggest schools in Queensland, and it attracts students from all over the region. The applicant tendered enrolment data provided by the school: exhibit 10. The data suggests about 22 families in the Highland Reserve estate have children enrolled at the school. That is not a large number: there are more than 22 families with school-aged children in the area. The other children presumably attend the nearby state school which is located further along Reserve Road away from Brygon Creek, or at one of the other local schools – some of which are closer to Brygon Creek.
The applicant said in her evidence at the hearing that the shopping centre car park was typically jammed at drop-off and pick-up times for the school and childcare centre.
The road network
Brygon Reserve Shopping Village is located near the junction of Reserve Road and Brygon Creek Road. Reserve Road connects Brygon Creek and Highland Reserve estate. The estate is located around 4 kilometres from the pharmacy. A report tendered by the applicant’s traffic consultants, Veitch Lester Consulting, points out Reserve Road is the major east-west distributor within the Upper Coomera area: exhibit 1 at p 2. That much was obvious from the site visit I undertook with the parties on 21 June 2012. The road is a dual carriage-way with four lanes and a median strip for a considerable part of the route. It is a good road and the Brygon Creek pharmacy is an easy drive from Highland Reserve estate, which is located on the western side of the road. Residents who wished to travel to Brygon Creek or any other point to the north (including Brisbane or the industrial area in Yatala) would exit the estate onto a roundabout on Reserve Road. There is only one exit from the estate at present.
Beyond Highland Reserve estate (as one travels away from Brygon Creek), the dual carriageway merges and the speed limit is reduced.
Mr Len Veitch, a traffic consultant called by the applicant, said figures compiled in February 2012 showed around 7800 cars a day used Reserve Road in the area around Highland Reserve estate. He opined that the traffic traveling north from the roundabout was a little busier than the traffic to the south. He pointed out that traveling on Reserve Road towards Brygon Creek was the logical choice for anyone who worked in Brisbane, although anyone working on the Gold Coast had several choices and might be expected to drive south.
Mr Veitch and Mr Yates, the applicant’s husband who happens to be a traffic engineer, also gave evidence about the causeway over the Coomera River. The causeway is on a road leading to another shopping centre some distance away at Oxenford. The causeway was damaged in flooding a while ago and it is in a poor state. It is unclear when it will be repaired or replaced. There are significant delays in transit times as a result of congestion at this point. I saw some of those delays for myself during the course of the view. Those delays make travel to the Centro shopping centre at Oxenford less attractive in the foreseeable future. The distance and access problems make the pharmacy at Centro Oxenford a less attractive option for residents of Highland Reserve estate.
There are fewer problems reaching the Coomera City Shopping Centre, which lies to the North of the Brygon Creek premises of the applicant on Old Coach Road, which runs off Reserve Road. The centre is quite large. It includes a large Woolworths supermarket and a range of specialty stores. Residents living in Highlands Reserve might visit that centre for their weekly shop, and for other purposes – including, conceivably, visits to the doctor and the pharmacist.
Highland Reserve estate
The Highland Reserve estate is a handsome new development. The latest census data suggest over 1400 people live there, including a significant proportion of young families. I was driven around the estate. The streets within the estate converge on one access point onto Reserve Road. If the residents turn left, they can travel north – to Brygon Creek and beyond. If they turn south, they can head for the nearest alternative pharmacy, Pharmacy Essentials, which is located in the Upper Coomera Neighbourhood Shopping Centre near the junction of Reserve Road and the Oxenford-Tamborine Road, Upper Coomera. That pharmacy is located only 1.4 kilometres from the estate. It is not far from the local state school, which is also located on Reserve Road.
Pharmacy Essentials
The Pharmacy Essentials outlet merits particular attention. It is the obvious alternative for residents of the Highland Reserve estate because it is closer. It is located in a shopping complex that includes a Coles supermarket and a general medical practice. The presence of the supermarket (it has only recently been taken over by Coles) is a major drawcard to the centre. Local residents, including residents of the Highland Reserve estate, might do their weekly shop at this centre. Many of them would also patronise the medical centre and Pharmacy Essentials as well – either because these services are closer when residents need to make a special trip to the doctor and pharmacist, or because residents might visit the pharmacist and even the doctor in conjunction with a regular shopping trip to Coles.
Other pharmacies
I have already referred to the pharmacies at Coomera City and Centro Oxenford. Both of those centres include large supermarkets and it is conceivable that residents from the Highland Reserve estate might travel to either centre for a visit to the pharmacy, especially in conjunction with the weekly shopping trip. Both shopping centres are further away from the Highland Reserve estate than the applicant’s premises, and access to Centro Oxenford is burdened by the need to negotiate the causeway, which I have already discussed.
There is also a pharmacy located in the River Meadows complex on Reserve Road, to the east of the applicant’s premises. The River Meadows complex is a small centre which houses a pharmacy and a medical practice, a vet, a dental clinic, and two other shops. It is located diagonally opposite another shopping centre that houses a Coles supermarket. As the applicant’s urban economist observed on page 4 of her report dated 7 March 2012, a patron of the River Meadows complex would not regard that centre as being conveniently co-located to the Coles supermarket across the road as the road is very busy: one would be reluctant to negotiate it on foot when burdened with shopping.
There are other pharmacies in the local area that were not the subject of evidence at the hearing, most obviously the United Discount Chemist at Oxenford and Amcal Coomera Village. They are even further away from Highland Reserve estate.
WOULD RESIDENTS OF HIGHLAND RESERVE REGARD THE APPLICANT’S PREMISES AS A REASONABLE AND PRACTICAL OPTION FOR THEIR PHARMACY NEEDS?
Residents of the Highland Reserve estate can access a number of pharmacies in Coomera/Upper Coomera/Oxenford that are co-located with medical centres. Several of those pharmacies are located within shopping centres that might attract weekly shoppers – most obviously the Pharmacy Essentials shop on Reserve Road in the Upper Coomera Neighbourhood centre. Some of the pharmacies are located near schools – including Pharmacy Essentials and the applicant’s premises.
There is little doubt residents of the Highland Reserve estate are within the catchment area of the Pharmacy Essentials shop in the sense that they “naturally and reasonably gravitate or flow to [those] premises”: Re Maryborough/Hervey Bay Friendly Society Chemists Ltd andAustralian Community Pharmacy Authority [2008] AATA 932 at [14] per Deputy President Hack SC and Member Kenny. But it has also been accepted that catchment areas for pharmacies may overlap: Strutt & Anor v Australian Community Pharmacy Authority & Ors [2006] FMCA 1245 at [146] per Federal Magistrate McInnis. As I explained in my decision in Newman and Anor and Australian Community Pharmacy Authority [2010] AATA 1055 (at [12]), the question in such a case is “whether the residents [of Highland Reserve estate] were likely to regard the [applicant’s] pharmacy as a reasonable and practical option, so that they could be expected to gravitate towards it”.
Would residents of the estate regard a pharmacy at Brygon Creek (with a medical centre and allied health facilities, a very large school and a childcare centre) as a reasonable and practical option, as the applicant and her urban economist contend? The respondent relies on the evidence of its expert economist, Mr Turnbull, to argue most residents of Highland Reserve would not gravitate towards Brygon Creek. The respondent says Pharmacy Essentials is the logical choice for everyone (or almost everyone) in the estate apart from those with an idiosyncratic preference because it is closer to the estate, it is not far from a school and it is within a complex that houses a medical centre and a Coles supermarket.
In this case, because the pharmacy has already been established, we can consider evidence of what the populace are already doing. Enrolment data provided by Upper Coomera State College suggests around 22 families from within the estate send children to that school. The applicant says parents may be inclined to visit a doctor and a pharmacy in connection with a school trip; I accept that is a reasonable assumption. But 22 families is not an especially large number. Mr Turnbull suggested in his oral evidence that 25-30% of the population in the estate were of school-age, but only 5% of the population attended Upper Coomera State College. Ms Bonwick, who was called by the applicant, agreed the recent census data showed around 30% of the people on the estate were under 15. She suggested around 11% of the population attended Upper Coomera College, but it appears her estimate may have included some children resident outside the estate. That may be a problem for the applicant.
I do not know for sure where the other school-aged children from the estate are enrolled. There are a number of schools in the area, including the state school located between the estate and Upper Coomera Neighbourhood complex which houses Pharmacy Essentials. Interestingly, Mr Turnbull said in his oral evidence that he anticipated most of the students would attend one of the larger schools to the north of the estate – which means most parents of school-aged children who drove their children to school would at least be going in the same direction along Reserve Road towards Brygon Creek, rather than south towards Pharmacy Essentials.
I am satisfied the enrolment data confirms some parents would view the applicant’s premises as a reasonable and practical option given they are routinely headed in that direction with their children. But the enrolment evidence on its own does not make it clear whether that is a widely-held view. More is required.
There was also evidence provided by the medical centre adjacent to the applicant’s pharmacy, and by the applicant herself who keeps records of her customers. Mr Turnbull analysed both sets of figures at the respondent’s request and he was questioned in detail about his conclusions during cross-examination. He agreed with Ms Bonwick that there was likely to be a strong correlation between the number of people who patronised the pharmacy and the numbers patronising the medical centre. He concluded from the figures that about 14.5% of the population in the estate currently or recently used the applicant’s pharmacy. Ms Bonwick offered a more generous estimate: she suggested in her evidence that about 17% of the population currently or recently patronised the applicant’s premises.
Mr Turnbull suggested he would be persuaded the population of the estate would regard the applicant’s premises as a reasonable and practical option if it were established that at least 20% of the populace used the pharmacy. The respondent did not expressly adopt this number as a guide, but I take Mr Turnbull’s point: if one is provided with evidence suggesting a significant number of people in the estate use the applicant’s pharmacy, it is hard to argue the population does not regard it as a reasonable and practical option.
I am not persuaded the pharmacy and medical centre statistics establish that a significant proportion of the population of the estate currently or recently used the applicant’s premises. But that is not the end of the matter. As Mr Turnbull agreed in cross-examination, one would expect those figures to increase if the applicant were authorised to dispense PBS medicines. The applicant says she expects a significant increase in her sales if she had PBS approval, and her pharmacy (and the adjacent medical centre, for that matter) could expect to be an even more attractive and viable option for the residents of the estate. The reasons for that are apparent from a Fact Sheet published by the Department of Health and Ageing, which was tendered by the applicant. The Fact Sheet explained customers of an unapproved pharmacy faced a number of unattractive consequences, including:
The payment made for that medicine will not count towards your customer’s PBS Safety Net Threshold;
Your customer cannot elect to ‘switch’ any subsequent repeats on that prescription to be supplied under the PBS/RPBS. Once an unapproved pharmacy is used to dispense a valid PBS/RPBS prescription, that supply, and all subsequent repeats, must be supplied as non-PBS (private) supplies; and
Your customer will not be able to obtain a refund from DHS-Medicare for any amount paid over and above the PBS co-payment for a medicine.
The respondent is sceptical about this. It introduced evidence from Mr O’Toole, a pharmacist employed by the Pharmaceutical Benefits Advisory Committee Secretariat. Mr O’Toole examined the applicant’s records and concluded she already provided many PBS medicines to customers. The respondent says the effect of Mr O’Toole’s evidence is that the applicant is already offering a full service to her customers. Mr Giugni, for the respondent, questioned Ms Yates about this at the resumed hearing. Mr Giugni pointed out the applicant routinely ordered a wide range of drugs for the pharmacy, including drugs that were heavily subsidised under the PBS scheme. The respondent says this establishes Ms Yates is unlikely to see a significant boost to her sales if she got PBS approval – because she already sells PBS medicines.
Ms Yates agreed she ordered a full suite of drugs. She said many of her orders were placed in anticipation that she would soon have PBS approval: the process has taken much longer and proved more difficult than she expected. She also said some of the drugs were ordered on behalf of another pharmacy that she previously owned. She agreed she sold some medicines that would otherwise attract the PBS subsidy because the subsidy was small and she could still make a profit. She also said she sold some more expensive medicines to people who were not eligible to obtain subsidised drugs and she supplied some drugs to people who were in difficult circumstances even though she incurred a loss in doing so.
I was satisfied the applicant was a truthful witness. She was able to offer coherent explanations for her decision to stock and occasionally sell medicines that were on the PBS list without being eligible to access the PBS subsidy. But I also accept she did not routinely sell the full range of medicines on the PBS list to anyone who presented a script. I have no reason to doubt her claim that she regularly turned away potential customers who wanted PBS medicines. I note her evidence that she was required to place a sign in a prominent place in the shop that explained the pharmacy did not have approval to supply PBS medicines: it is unclear how many potential customers might have exited the shop after seeing the sign without ever presenting a script.
I am satisfied the applicant is right to expect her sales would increase once word got out that she was in a position to supply PBS medicines to anyone who wished to obtain them, and to avoid the consequences referred to in the Fact Sheet from which I have quoted. While it is impossible to be precise, it is likely the increase in sales will be significant. It is also likely that a good deal more people in the Highland Reserve estate will come to regard the applicant’s premises as a reasonable and practical option for their pharmacy needs once it is in a position to offer a full range of PBS medicines without the adverse consequences I have referred to. They are unlikely to be deterred by the distance, given the quality of Reserve Road and the fact that many people who live in the estate are used to driving north for other purposes.
That is not to say I anticipate the bulk of the population will suddenly shift its allegiance from Pharmacy Essentials to the applicant’s premises. The attraction of the Pharmacy Essentials location means it may remain the most popular choice for the residents of Highland Reserve. But that is not the test. It is enough that the population as a whole regards the applicant’s premises as a reasonable and practical option. I am satisfied that will be the case once the applicant’s premises become approved.
CONCLUSION
The decision should be set aside. I decide in substitution that a recommendation be made that the applicant’s premises be approved.
I certify that the preceding 34 (thirty four) paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe.
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Associate
Dated 11 September 2012
Dates of hearing 21 - 22 June 2012
27 August 2012Counsel for the Applicant Mr Favell Solicitors for the Applicant Woods Hatcher Solicitors Counsel for the Respondent Mr Giugni Solicitors for the Respondent Australian Government Solicitor
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