Admin/Union

The Curious Case of the Chemist in Union House

7 June 2017

Parkville students have likely lost the right to a campus pharmacy, following an ‘unauthorised’ business move linked to controversial pharmacy giant Chemist Warehouse.

Students lost the long running Union House campus pharmacy business in November, along with its adjoining pharmacy license. The pharmacy had recently changed hands before the move.

Because the government only grants limited pharmacy licenses for each area, the move will also likely block students from having a new pharmacy close to the University.

Farrago can reveal that the campus pharmacy license has passed to a figure closely linked to Chemist Warehouse.

Union House’s then-landlord, MUSUL Services, has alleged this move breached lease agreements and contradicted initial business plans.

This is not the first time Chemist Warehouse or its associates have grabbed headlines for contentious expansion practices.

Until recently, the University-owned MUSUL Services managed Union House leases, including the pharmacy space. They alleged the new ownership submitted a business plan that “indicated that they intended to continue to operate the leased space as a pharmacy”.

According to MUSUL CEO, Simon Napthine, the new owners went back on that promise.

“A few months after the transfer of the lease, the new tenant left the premises, which was in breach of their lease obligations to remain open and operate as a pharmacy,” said Napthine.

According to MUSUL Services, the pharmacy license previously based in Union House was moved “850 metres away in Elizabeth St”.

That would place it at the new Chemist Warehouse on Elizabeth Street at the Victoria Market.

Farrago is not alleging that Chemist Warehouse or any associates were necessarily involved in any untoward activity. Nor is it making any allegations about who was aware of, or initiated, what happened. Instead, it notes that they have been the apparent beneficiary of the pharmacy license previously based on campus.

The regulations

Farrago contacted a range of pharmacy figures around the issue, including Aaron Bawden, the Registrar of the Victorian Pharmacy Authority.

“If a pharmacist wishes to establish a pharmacy at the University of Melbourne, they would need to make an application to the Authority, and the Authority would approve the application if it meets the requirements of the Act and Authority guidelines,”
said Bawden.

With the existing pharmacies in the greater Parkville and Carlton area, including the Chemist Warehouse in Elizabeth Street, the University may struggle to get a permit and therefore, another pharmacy in Union House.

“This will be contingent upon another permit being granted, which is proving difficult to obtain,” said Napthine.

A spokesperson from the Federal Department of Health was also unable to provide advice as to whether this scenario would satisfy the requirements of the Pharmacy Location rules, emphasising that there are a number of factors that would need to be considered.

Currently, the closest pharmacy to the University is HealthSmart Pharmacy on Grattan Street, an estimated ten minute walk from Tin Alley. This can be inconvenient for students between classes, who were once able to rely on the accessible campus pharmacy.

The pharmacy giant

It is unknown what the motivations were behind the move of the pharmacy. Chemist Warehouse and associates have failed to reply to Farrago’s requests for comment.

What is known is that Chemist Warehouse, and its associates, have a track record that includes overcoming location loopholes that otherwise limit the number of pharmacies a pharmacist can own or operate within a given state or territory.

“Chemist Warehouse ‘controls’ about 300 pharmacies with annual revenue of $2.7 billion,” wrote Tony Boyd in the Australian Financial Review last year.

A range of smaller pharmacies have complained, in media coverage over the years, that Chemist Warehouse is an overly aggressive player in the pharmaceutical industry, but the company says it is merely offering consumers a good choice.

The future

MUSUL’s response to the pharmacy closure in November was swift, with the organisation immediately putting out a strongly worded letter. In mid-March, Simon Napthine told Farrago that MUSUL had taken action.

“MUSUL initiated legal actions against the tenant about breaking the conditions of the lease. This matter is close to being settled out of court but on terms satisfactory to MUSUL and the access to the space formally handed back to MUSUL at the end of this month,” he said.

Napthine has now confirmed that it had been settled.

“I can confirm that the pharmacy store matter was recently finalised and settled with the tenant, who has surrendered the lease,” he said.

MUSUL itself recently ceased operating Union House tenancies, with the University now directly managing them. Now that they control the lease it seems likely a new business will emerge there soon.

Will it be a pharmacy? Napthine says the relocation and strict pharmacy rules mean it probably won’t be.

“The University is starting to move onto other options that will be appropriate for this space,” he said

Farrago has made multiple attempts to reach Chemist Warehouse head office, the store on Elizabeth Street and associates, who did not respond as of deadline.