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40 BUSINESS THROUGH INNOVATION LEGAL DWEACTIVATING PBS APPROVALS: WHAT YOU NEED TO KNOW hile the temporary where an approved premises has been closure of a pharmacy vacated and the pharmacist is looking is something most for alternative premises, it’s unlikely that pharmacy owners would deactivation will be approved. strive to avoid, there are many situations they may find themselves in that call for such action to be taken. For many businesses, a temporary closure can be as simple as closing the shop and coming back in a few weeks, but consideration must be given to the maintenance of any approvals under the Pharmaceutical Benefits Scheme. The Department of Health has the authority to cancel a pharmacist’s PBS approval under the National Health Act, where it is satisfied that the pharmacy is not carrying on its business within the approved premises. For many pharmacy owners, PBS approval represents a significant revenue stream for their business and considerable issues for its viability would ensue if approval were to be cancelled. Luckily, in certain circumstances, the Health Department will allow for these approvals to be temporarily ‘deactivated’ rather than cancelled, meaning pharmacy owners can cease operating for a set period, then resume trading under their original approval. When should an application for deactivation be made? An application for deactivation must be made in writing and emailed to pbsapprovedsupplier@health.gov.au before the pharmacy ceases to supply its pharmaceutical benefits. If the pharmacy is closed before seeking deactivation, this will likely result in the cancellation of the pharmacist’s approval. When are applications likely to succeed? In assessing these applications, the Health Department’s primary concern is ensuring that the community has access to the supply of pharmaceutical benefits. Consequently, deactivation will generally be granted only where the closure of the pharmacy is due to circumstances outside the control of the pharmacist, and the expected closure is for a limited period. An indication as to duration of an acceptable deactivation period was shown in a recent decision where a pharmacist was granted deactivation for up to six months. The Health Department has provided some examples of instances where a deactivation application might be approved: • Where a pharmacist needs to close the pharmacy for compelling and personal reasons, and a locum pharmacist cannot be obtained to operate the pharmacy. • The pharmacist is unable to open the pharmacy for reasons beyond the control of the pharmacist, such as unexpected damage or repairs required to be made to the premises. • The approved pharmacist has entered a contract for sale, transfer or disposal of the pharmacy at its current location and is unable to carry on business as a pharmacist, for reasons beyond their control, until the transfer of ownership occurs. When are applications unlikely to succeed? An application for deactivation is not likely be accepted if it is purely for the commercial advantage of the business. A senior member of the Health Department expressed the lack of concern for commercial justifications during court proceedings with the following statement: “Allowing approval holders to close pharmacies and withhold approvals from the market until they identify an advantage for themselves would only encourage strategic behaviour that is not necessarily consistent with the objects of the scheme.” The Department has also stated that How to make a request to deactivate approval A request to deactivate PBS approval must be made to pbsapprovedsuppliers@health.gov.au and should include the following: • Any evidence supporting the steps made to resolve leasing or legal disputes for the pharmacist. • Written notification, or evidence, of the circumstances leading to the pharmacist’s inability to carry on business at the approved premises. This may include documents such as a notice to renovate the premises, requiring the pharmacist to vacate temporarily. • The duration of the expected closure of the premises. Extensions to a deactivation period We note that if a deactivation period is approved, it’s unlikely that any extension will be granted unless extreme circumstances apply. Conclusion While the Health Department has proven to be reluctant to grant these requests, if pharmacists have valid reasons for temporary shutdowns, there is some capacity to protect associated approvals. If you have unexpectedly suffered from circumstances that are beyond your control, please contact the pharmacy team at Clinch Long Woodbridge Lawyers. Disclaimer: The content of this article is general in nature and for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication. RETAIL PHARMACY • MAY 2021 By Sam Saad. Principal, Clinch Long Woodbridge Lawyers Sam Saad is Principal at Clinch Long Woodbridge Lawyers, a Sydney-based law firm with a focus on pharmacy. Inquiries: ssaad@clw.com.au or 02 9279 4888.