The Pharmacy Location Rules are the Federal rules that dictate where a pharmacy can be approved to supply PBS medicines. They apply when you want to open a new pharmacy, relocate an existing one, or expand or contract. They do not apply to a purchase of an existing pharmacy where the buyer intends to keep the pharmacy exactly where it is.
That last sentence is the one that saves people the most stress. If you are buying an existing pharmacy at its current site, you are not in ‘Pharmacy Location Rules’ territory. You are in ‘change of ownership’ territory, which is a different process with different paperwork. Knowing which of those two situations you are in changes your timeline, your budget and what you need to have in place before you sign anything.
Here is what the Rules cover, when they apply to you, and what sits alongside them.
What the Pharmacy Location Rules actually are
The Pharmacy Location Rules sit under the Federal PBS framework. They dictate where a pharmacy can be approved to dispense medicines under the Pharmaceutical Benefits Scheme, and they exist to manage the distribution of PBS approved pharmacies across the country rather than letting them cluster wherever commercial demand happens to be strongest.
In practice, the Rules set out the circumstances in which the Commonwealth will approve a pharmacy at a particular address. An application has to fit one of the defined categories, and it has to satisfy all of the criteria attached to that category.
One thing is worth being clear on up front: a pharmacy and a PBS approved pharmacy are not automatically the same thing. You can operate a pharmacy that is not PBS approved. It is a very different commercial proposition, and it still requires approval at State or Territory level, but the option exists. The Pharmacy Location Rules are specifically about PBS approval.
Who assesses an application
Applications under the Pharmacy Location Rules are assessed by the Australian Community Pharmacy Authority, usually shortened to the ACPA. The ACPA considers an application against the Rules and makes a recommendation to the Commonwealth Department of Health. The decision itself on whether approval is granted sits with the Department.
The ACPA meets on a published schedule and works to set cut-off dates, so timing matters. Missing a cut-off can push a project back by weeks, which is not something you want to discover after you have committed to a lease or fitout schedule.
When the Rules apply to you
The Rules are most relevant in three situations. The first is opening a new pharmacy: a brand new PBS approved pharmacy at a location that does not currently have one sits squarely inside the Rules. The second is relocating, where moving an approved pharmacy to a new address, whether that is across the road or across town, is assessed against them. The third is expanding or contracting, where changes to premises and footprint can bring the Rules into play depending on what you are doing and where.
And when they don’t
This is the part that catches people out, usually because a well meaning generalist adviser has told them to brace for an ACPA application when none is needed.
If you are buying an existing PBS approved pharmacy and it is staying at the same location, the Pharmacy Location Rules and the ACPA are generally not the pathway. What you need instead is a new PBS approval, known as a change of ownership. The approval attached to the current owner does not come along with the keys. The incoming owner applies for their own.
Two things follow from that, and both matter commercially. First, the approval is not an asset you can assume is yours on settlement day. It has to be applied for, and the application has to be right. Second, PBS approval at the Federal level is only half the picture. You also need approval at State or Territory level, and those requirements differ depending on where you are.
A client came to us recently wanting to move their pharmacy into a larger tenancy in the existing local area. On the face of it, a simple upgrade: better position, better floor plan, same customers. Because a relocation is assessed under the Rules, we looked at the proposed site before the lease was signed rather than after. The detail of the tenancy and its position relative to other approved pharmacies and nearby supermarkets mattered a great deal to how the application would be assessed. They went into the lease negotiation knowing what the regulatory picture looked like, and were able to make the approval outcome part of the deal instead of carrying that risk alone.
State or Territory approval sits alongside the Federal process
Every State and Territory regulates pharmacy ownership in its own way. The rules differ on who can own a pharmacy, how many pharmacies a single pharmacist can own, and what has to be registered or approved before trading begins.
Pharmacies must generally be owned by pharmacists, with limited exceptions. There are also limits on how many pharmacies a pharmacist can own in each State or Territory, and those limits are not the same everywhere. If you already own one pharmacy and you are looking at your second or third, check the cap that applies in the relevant State or Territory before you go too far down the path.
Owning a pharmacy and being a practising pharmacist are also two different things. You can be registered and still be caught out by the ownership rules, because they are testing something different.
What an application is assessed against
At a high level, an application under the Pharmacy Location Rules is assessed against criteria attached to the category you are applying under. Those criteria commonly deal with matters such as the proximity of the proposed pharmacy to other approved pharmacies, the nature of the premises and the site, and whether the pharmacy will be accessible to the public in the way the Rules contemplate.
The categories and criteria are technical, and they are updated from time to time. This is one of the areas where getting advice early is a great deal easier than fixing an application later. You don’t know what you don’t know, and in this corner of the industry that is not a reflection on you. It is a reflection on how the system is built.
Work out which process you are in, before you sign
A first time buyer came to us part way through a purchase, having been told by a generalist adviser to prepare for an ACPA application and a long approval process. They were buying an established pharmacy that was staying exactly where it was. The Pharmacy Location Rules were not the issue at all. What they did need was a new PBS approval as a change of ownership, plus approval at State level, and a contract that dealt properly with what happened if approval was delayed. We reset the process and the deal proceeded on a realistic timeline, with the right conditions in the contract.
That question, “which process am I actually in?”, drives everything else: how long the deal takes, what your contract needs to say about approvals, what happens if approval does not come through, and when you can start trading. Unlike many businesses, when a pharmacy settles the buyer trades from commencement of trade on the settlement date, so there is no room to sort out approvals afterwards.
None of this should put you off. The Rules are not designed to be intuitive, but they are navigable, and the cost of assuming the wrong pathway is real: wasted application fees, a lease you cannot use the way you planned, or a settlement date you cannot meet. Getting the question answered early is what keeps a project calm.
Key Takeaways
- The Pharmacy Location Rules are Federal rules governing where a pharmacy can be approved to supply PBS medicines.
- They apply mainly to new, relocating and expanding or contracting pharmacies, not to buying an existing pharmacy at the same site.
- Applications are assessed by the ACPA, which makes a recommendation to the Commonwealth Department of Health.
- PBS approval does not come with the keys. A buyer applies for a new PBS approval, known as a change of ownership.
- Federal approval is only half of it. You also need approval at State or Territory level, and the rules differ across the country.
- Not every pharmacy is PBS approved, and a non-PBS pharmacy still needs State or Territory approval.
NEXT STEPS
Whether you are opening, moving or buying, the order of operations matters:
- Work out which process you are in: Pharmacy Location Rules and an ACPA application, or a change of ownership with a new PBS approval.
- Check the ownership rules and the cap that applies in the relevant State or Territory.
- Check the ACPA meeting schedule and cut-off dates against your commercial timeline before you commit to a site or a lease.
- Make sure your contract and lease deals with what happens if approval is delayed or refused.
Doing this in the right order keeps your timeline realistic and your position protected. To discuss a pharmacy approval, relocation or purchase, contact Vitality Law Australia
Frequently Asked Questions
Do the Pharmacy Location Rules apply when I buy an existing pharmacy?
Generally not, if the pharmacy is staying at the same site. A straightforward purchase is dealt with as a change of ownership, where the incoming owner applies for a new PBS approval. The Rules apply mainly to new, relocating and expanding pharmacies.
Does the PBS approval transfer to me when I buy the pharmacy?
No. The approval does not simply pass to a new owner with the keys. The buyer applies for a new PBS approval, known as a change of ownership, and will also need approval at State or Territory level.
What is the ACPA?
The Australian Community Pharmacy Authority. It assesses applications against the Pharmacy Location Rules and makes a recommendation to the Commonwealth Department of Health, which makes the decision.
Can I run a pharmacy that is not PBS approved?
Yes. Not every pharmacy is PBS approved. It is a different commercial model, and you would still need approval at State or Territory level.
How many pharmacies can one pharmacist own?
There are limits, and they differ by State or Territory. Check the cap that applies where the pharmacy is located before you commit to a second or subsequent site.
How long does an ACPA application take?
It depends on the category you are applying under and the ACPA meeting schedule, which runs to published cut-off dates. Because of that, it is worth setting your commercial timeline around the approval process rather than the other way around.
Sarah Stoddart
This article is intended to be for general information only. It does not constitute legal advice nor does it establish a relationship of client and lawyer. Specific circumstances or changes in law may vary the accuracy or applicability of the information published. We recommend seeking specific legal advice particular to your circumstances before taking any action, or refraining from taking any action, on any issue dealt with in this article.