This investigation into the approval process for pharmaceuticals produced findings with broader lessons for Commonwealth agencies about the importance of proper program design, sharing information necessary to ensure proper outcomes and about service recovery arrangements when things go wrong.ForewordThis is a report on the Ombudsman’s investigation of a complaint from a pharmacist about the Department of Health (DoH) and the Department of Human Services (DHS). The complainant contacted our office because he believed that a neighbouring pharmacy had been incorrectly approved to dispense medications under the Pharmaceutical Benefits Scheme (PBS). He told us the neighbouring pharmacy had relocated from its original site to one closer to his pharmacy than the rules allowed and this affected the viability of his business. He had unsuccessfully attempted to find out from DoH and DHS how this had happened, and was frustrated in his attempts to obtain a resolution.The approval process, jointly administered by DoH and DHS, relies upon the pharmacist applying for approval to provide evidence of the distances between their new location, old location and any other nearby pharmacies. There was an error in the measurement of the distances between the pharmacies. This error had come to the attention of the DoH before the approval was finalised, but the information was not relayed to DHS, which granted the approval without knowing that the application did not meet the location requirements.We found problems in the design of the pharmacy approval program, which focussed primarily on the interests of the applicant pharmacist without considering how to protect the interests of other pharmacies in the area. The program was delivered by two separate agencies, without sufficient regard to the need to share information in a timely way to ensure the integrity of the scheme. When it became apparent to DoH that DHS had made a decision based on wrong information, it initially failed to consult with DHS about how to put things right. In our view, DoH responded to the mistake in an inappropriately defensive way. Finally, when someone affected by the error complained about it, they were met by an unwillingness to explain or admit fault, and told their only option was to go to court.We were unable to obtain a remedy for the complainant. However, DoH agreed that, if the complainant makes a claim for compensation including evidence of loss, it will refer that claim to its Minister for consideration.We note that DoH has already implemented changes to its administrative procedures to address some of the problems that this complaint revealed. At the conclusion of this report we make four recommendations that we believe will further strengthen those arrangements, and provide a more open and responsive complaint process.While this complaint is about a very particular set of factual circumstances, we believe it holds broader lessons for Commonwealth agencies about the importance of proper program design, sharing information necessary to ensure proper outcomes and about service recovery arrangements when things go wrong.
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