Significant changes to Queensland’s pharmacyownership regime

DATE PUBLISHED: December 11, 2024

key takeaways

New legislation regulating the ownership of pharmacies in Queensland was passed earlier this year.
The new legislation refines existing pharmacy ownership rules to align with other Australian states and introduces a raft of new compliance measures, including the Queensland Pharmacy Business Ownership Council.
Pharmacy owners must review these legislative changes to assess whether restructuring is required to ensure ongoing compliance and to avoid penalties.

What are the changes?

In March 2024, the Pharmacy Business Ownership Act 2024 (Qld) (New Act) was passed by Parliament, which aims to refine and modernise pharmacy ownership rules and align the ownership rules with other states in Australia.

The New Act introduces a raft of new changes to pharmacy ownership rules in Queensland which are due to commence on 1 July 2025. The introduction of the New Act (which will replace the current Pharmacy Business Ownership Act 2001 Qld) (2001 Act)) will mean that pharmacy owners will need to review and adjust their business structures to ensure ongoing compliance.

A summary of the key legislative updates that have been introduced under the New Act, and the implications this will have for pharmacy business owners, is set out below.

Changes under the new act

1. Pharmacy ownership rules

The New Act retains, but clarifies, the existing requirements relating to pharmacy ownership. That is, pharmacy ownership is restricted to:

practising pharmacists;
corporations whose directors and shareholders are all by practising pharmacists; and
corporations owned by a combination of practising pharmacists and their close adult relatives, with practising pharmacists holding the majority of shares and all voting shares.

Clause 17 of the New Act retains the limit, previously set in the 2001 Act, regarding the number of pharmacy businesses a person or corporation may have an interest in, being a maximum of five pharmacy businesses.

2. Material interest

The New Act establishes a new and critical concept of Material Interest. Specifically, pursuant to section 14 of the New Act, a person can only hold a “Material Interest” in a pharmacy business if they are a practicing pharmacist or a close adult relative of a practicing pharmacist.

A close relative is defined in the New Act to mean a spouse or child of the practicing pharmacist.

Furthermore, a person is taken to hold a “Material Interest” in a pharmacy business if:

they are a shareholder of a corporation that owns a pharmacy business (limb 1);
they are a beneficiary of a trust, where the owner of the pharmacy business is a trustee of a trust (limb 2); or
they are not an owner but they have another interest in the pharmacy business that entitles them to receive consideration that varies according to the profits or takings of the business (limb 3).

Importantly, limbs 1 and 2 of the above Material Interest definition will means that any existing pharmacy businesses that:

are owned by a corporation, whose shareholder(s) is a trust; or
are owned by a trust, whose potential beneficiaries are not limited to the practicing pharmacist, their spouse and adult children,

will not comply with the New Act. Accordingly, we forecast that the vast majority of existing pharmacy structures in Queensland will need to restructure in order to comply with the New Act.

Separately, limb 3 suggests that any entity that has an interest in a pharmacy business (e.g. franchisor, service entity, landlord) by taking a percentage of profits will also put the pharmacy business in breach of the New Act. This means that all existing arrangements with third party counterparties should be reviewed to ensure compliance with the New Act.

3. Formation of a pharmacy council

The New Act establishes the Queensland Pharmacy Business Ownership Council (Pharmacy Council) as a statutory body to regulate pharmacy business ownership in Queensland. The functions of the Pharmacy Council include:

deciding applications relating to pharmacy licences;
changing, suspending and cancelling pharmacy licenses;
monitoring and enforcing compliance with the New Act; and
maintaining a register of pharmacy businesses.

The Pharmacy Council consists of at least five members, appointed by the Governor in Council upon recommendation of the Minister.

4. Licencing requirements

The New Act imposes new licensing requirements for the ownership of a pharmacy business.

A pharmacist (or an eligible person) will be unable to own a pharmacy business if they are not licensed under the New Act. The Pharmacy Council may only grant a licence if satisfied that the applicant is an eligible person, a fit and proper person, and does not already hold an interest in more than five pharmacy businesses.

The New Act also provides for an annual licence renewal process, allowing regular and effective oversight of compliance with legislative requirements, including the ownership requirements.

5. Public register of pharmacies

The New Act requires the Pharmacy Council to maintain a public register of licensed pharmacy businesses accessible on the Pharmacy Council’s website.

The register will contain, for each licensed pharmacy business, the business name, address of the licensed premises for the business, and details of services provided where the Pharmacy Council considers it appropriate.

6. Audits and public reporting

The New Act provides that the Pharmacy Council may audit the operations of licence holders to the extent they relate to the obligations of the licence holder under the Act. Licence holders must give the Pharmacy Council full and free access to all documents and information relevant to the audit.

An annual report on audits conducted and compliance actions taken by the Pharmacy Council will be by the Phar within three months of the end of each financial year.

7. Fees

Fees will apply for applications made under the New Act and will be set out in a regulation made under the New Act, but these will likely be in the order of:

new pharmacy licence application: between $2,200 and $3,200; and
annual licence renewal: between $1,700 and $2,500.

How can MCW help you?

The introduction of the New Act will have a considerable impact on pharmacy owners and prospective pharmacy buyers in Queensland. It is important that pharmacy owners are across the new legislative changes to ensure they remain compliant (and avoid significant penalties).

MCW can assist with reviewing your existing pharmacy ownership structures to ensure compliance with the New Act, as well as:

a) advising on any required restructures in order to meet the newly introduced “Material Interest” test;

b) documenting any required restructures;

c) assisting on transfer duty, landholder duty and corporate trustee duty advice for any restructures, including accessing the new exemptions made available from 1 January 2025. For a detailed summary of the new duty exemption regime under the New Act;

d) assisting owners with the usual matters of concern to owners for their businesses, including but not limited to:

(i) employment law (agreements, advice on moving employees to a new structure);

(ii) banking and finance assistance with lenders; and

(iii) property law assistance.