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Pharmacy Licences

Medsafe Guidelines for Pharmacists and those Wishing to Operate a Pharmacy

Contents

1. Executive Summary
2. General information
3. Ownership structures of pharmacies
4. Location of pharmacies
5. Penalties
6. Audit for licensing purposes

1. Executive summary

Amendments to the Medicines Act 1981 provide for the licensing of the operators of pharmacies.

The provisions

• ease the rules on ownership and location of pharmacies
• recognise in law the professional responsibility of pharmacists
• provide significant penalties for offences against the Act in regard to the licensing of the operators of pharmacy.

This paper outlines the provisions of the amendment and provides information on the application process.

It is recommended that pharmacists consult the relevant legislation and take legal advice before establishing or amending the ownership structure of their pharmacy.

2. General information

The Medicines Amendment Act 2003 amends the Medicines Act 1981 by providing for the licensing of those who own and operate community pharmacies and those that own and operate hospitals in which there is a pharmacy.

These amendments make important changes to the rules covering the ownership structure and locations of pharmacies.

With the change from registration of pharmacies under the Pharmacy Act 1970 to the licensing of the operators of pharmacies under the Medicines Act 1981, the Licensing Authority for pharmacies will be the Director General of Health. The Director General has used the powers granted her to delegate this responsibility to office holders within Medsafe.

A licence to operate a pharmacy authorises the establishment of the pharmacy at a specified site and the carrying on of pharmacy practice in the pharmacy. Any changes to the ownership structure, or location, of the pharmacy will require an application for a new licence.

There is a provision in the Act that allows the Licensing Authority to restrict or prohibit the licence holder from undertaking any specified activity or using any specified process. In other words, should it be necessary, the Licensing Authority can limit the range of pharmacy practice that may be undertaken at a particular pharmacy.

The licence will be valid for a period of one year and will then expire. Licensees will need to apply for a new licence each year.

To ensure continuity between the existing and the new licence, an application and payment must be received by Medsafe at least one month before the expiry of the existing licence.

Many of the restrictions on the ownership and location of a pharmacy have been eased or removed.

In making these changes the Medicines Act makes two stipulations:

• as in the past, no pharmacy may be open to the public unless it is under the immediate supervision and control of a pharmacist. If a pharmacist is not present and able to exercise direct supervision and control the pharmacy must close.
• the pharmacist's responsibility as a health practitioner to uphold the professional and ethical standards of pharmacy practice are protected through a mandatory condition on every licence. The operator must not request or require any pharmacist who is employed or engaged in duties at a pharmacy to act in a way that is inconsistent with the applicable professional standards.

The Act also provides for significant penalties (suspension or cancellation of the licence, imposing financial penalties of up to $40,000, or forbidding a person to own or have an interest in a pharmacy for up to five years) if an applicant or licensee breaches the provisions of the law surrounding the licensing of pharmacies. (see section on penalties).

3. Ownership structures of pharmacies

Applications must be made by a New Zealand resident or a body corporate that is incorporated in New Zealand.

A New Zealand resident is a person who holds citizenship by birth or by being granted citizenship or holds a visa that allows the holder to reside permanently in New Zealand.

Community pharmacy
Community pharmacies may continue to be owned by pharmacists as a sole trader or pharmacists in partnership.

The ownership structure for companies that operate community pharmacies must have the majority of the share capital owned by pharmacist/s and effective control vested in them.

A company may only operate up to five pharmacies. Similarly a person (a pharmacist) may only operate or hold a majority interest in five pharmacies. (ref s55F)

There are minimal controls over the minority ownership of pharmacies. Authorised prescribers may have an interest in a pharmacy only with the approval of the Licensing Authority. Outside that provision any person, or any company, may hold a minority interest in as many pharmacies as they wish. The Licensing Authority may require further information from the applicant that the pharmacy company is of good repute before granting a licence.

A company, or person, that operates or holds a majority interest in five pharmacies may purchase and own a sixth pharmacy for a period of three months while selling one of the original five.

A number of pharmacies have an ownership structure that has been approved by the Pharmacy Authority. The Authority's decision remains in force until 18 September 2005 unless the decision expires before that date. While the decision remains in force the Licensing Authority may vary or revoke any of the Pharmacy Authority's conditions or impose any further conditions as the Licensing Authority considers appropriate.

Hospital pharmacy
The owners of hospitals are required to apply for a licence if they operate a pharmacy within their hospitals. This may include 'atrium' pharmacies, within a hospital, servicing the needs of outpatients, staff and visitors.

Other ownership structures
The Act enables other owners currently carrying on business as a pharmacy, such as the Friendly Societies, to continue. It also provides for the Governor General, by Order in Council, made on the recommendation of the Minister of Health, to exempt a pharmacy from the ownership structures specified in the Act. In making the recommendation the Minister must be of the opinion that the exemption will improve health services or access to health services in the community and location of the pharmacy.

4. Location of pharmacies

Pharmacies may now operate in conjunction with other businesses and may be located with direct access between the pharmacy and other businesses. Pharmacies may, for example, operate within a specified area of supermarket.

Pharmacies may be located within health centres. There are no restrictions on direct access between pharmacies and medical practitioners. There are however restrictions on authorised prescribers having an interest in a pharmacy. (Ref s42C. Interest is defined in s5A).

There is a further provision in the Act that makes it an offence for any pharmacist or person associated with a pharmacy to give, offer, or agree, to give any money or other consideration as a commission on prescriptions to any authorised prescriber.

Where a pharmacy is operated in conjunction with other businesses only that portion where pharmacy practice is carried out will be licensed as a pharmacy. As such, only that portion and not the whole enterprise, may display signage identifying the space as a pharmacy.

Security
With the removal of the requirements for pharmacies to be stand alone units the security of pharmacies and of medicines is paramount. Prescription and restricted medicines must be secured at all times in ways that prevents public access to them. The pharmacy, and any storage areas for the purposes of the pharmacy, must be able to be made secure when the pharmacist is absent or the pharmacy is closed.

5. Penalties

The licensing of pharmacies and the ownership structure provisions are now within the Medicines Act 1981. This Act has many powers incorporated in it that were not included in the Pharmacy Act 1970.

The Licensing Authority has the power to require further information (see s55B) and may require an applicant to supply information additional to that contained in the application in regard to:

• determining the nature of the interest held by any person in the pharmacy
• the requirement for a person to be a 'fit and proper' person or a body corporate to be of 'good repute'
• the ownership structure of the pharmacy

If the applicant fails to supply this information within 30 days of the request, or within any agreed extension, the application lapses. (ref s55B)

If the Licensing Authority is satisfied that the holder of a licence to operate a pharmacy has failed to comply with any conditions affecting the licence the Authority can:

• suspend a licence for such reasonable period as may be required to enable the Licensing Authority to consider the case
• cancel the licence
• impose a penalty not exceeding $40,000
• forbid the licence holder or any person with an interest in the pharmacy from holding any interest in or operating a pharmacy for a period not exceeding five years. (ref s51(6) & (6A)

The ability to revoke a licence may apply to just one pharmacy or to all the pharmacies owned by the operator.

The imposition of penalties cannot be done without providing the licensee with an opportunity to be heard or with the reasons why the Authority has taken the decision he or she has.

Penalty for false statement
Swearing an affidavit that the information provided in an declaration is correct, when it is not, is an offence under the Oaths & Declarations Act 1957

Further s76 of the Medicines Act states

1. Every person commits an offence against this Act who, for the purposes of obtaining, whether for himself or for any other person, the grant of any licence under this Act, or for any other purposes in relation to this Act,
   1. makes any declaration or statement that he knows is false in any particular or
   2. utters, produces or makes use of any such declaration or statement or any document containing the same or
   3. utters, produces, or makes use of any document that he knows is not genuine.
2. Every person who commits an offence against this section is liable to imprisonment for a term not exceeding 6 months or a fine not exceeding $1000.

6. Audit for licensing purposes

New pharmacies, and pharmacies that move to new sites, will be subject to an initial licensing audit

Community pharmacies
From October a new audit programme will be instituted. This programme will audit all pharmacies at least once within a five-year cycle. Further information on this new audit will be provided nearer the time.

Hospital pharmacies
Hospital pharmacies will be be audited on a two-year cycle. The audits will cover the legislation affecting pharmacy practice and the relevant parts of the New Zealand Codes of Good Manufacturing Practice for Therapeutic Products.

Applications for licences to operate pharmacies are to be made to:

Licensing Authority
Medsafe
Ministry of Health
PO Box 5013
WELLINGTON

Telephone 04 496 2579