‘Pharmacy deserts’: another example of markets, however protected, failing to deliver essential goods and services to all Australians.
Fri 24 Jul 2026 12.00 AEST
Photo: AAP Image/Lukas Coch
A new study has found that Australia has, on average, 2.22 pharmacies for every 10,000 people. Not only is this figure below the international average of 2.75, but it also conceals stark local gaps. Pharmacies are hard to find around the fringes of capital cities, and some remote Northern Territory communities have no pharmacies at all.
The study has some limitations. But this is not a simple city-versus-country story. Overall, pharmacy density was in fact higher in regional, rural and remote areas than in metropolitan Australia.
But population-based averages can obscure important information. A pharmacy serving a vast outback region may look adequate on a per-head basis, but still be hundreds of kilometres away from many residents. Meanwhile, fast-growing outer suburbs can be home to tens of thousands of residents long before essential services catch up.
The maps in the study expose a basic limitation of markets – they distribute services according to expected revenue, not need.
Pharmacies are privately owned businesses. They need enough customers to remain viable. While that’s an understandable business calculation, it’s not an acceptable principle for allocating essential medical services.
Similar problems with the distribution of medical services appear elsewhere. Australia Institute research has shown that Medicare’s fee-for-service model rewards providers for treating a high volume of patients. That makes the Medicare model poorly suited to smaller communities, where the number of patients is too low to sustain a conventional private practice without charging high fees.
Correcting this may require us to stop treating essential services as a commodity. At the very least, a strong case exists for government-owned clinics and facilities in places that are poorly served by the existing arrangements.
Abortion access provides another example. In South Australia, 17.5% of women who may need abortion care live outside metropolitan Adelaide, yet 86% of abortions are performed by metropolitan providers.
Even in the case of early-term abortions, which may only require medication rather than surgery, access still depends on a chain of local services that includes a trained prescriber, a pharmacy able and willing to dispense the medicine, and appropriate advice and follow-up. And this can be hard to find in regional and remote parts of the country. The Therapeutic Goods Administration removed special registration requirements for prescribers and pharmacists in 2023, but regulatory permission does not conjure a service where there’s no viable provider.
The problem extends beyond health care. Outer-suburban growth areas can lack schools, childcare, public transport and community services. The same is true of healthy food. Research in Melbourne found that many outer and growth-area neighbourhoods have poor access to healthy food outlets while unhealthy options proliferate. Sydney’s so-called Red Rooster Line illustrates the structural inequalities in that city, including unequal access to local services and amenities.
Markets are good at selling things to people with purchasing power in places with plenty of customers – the reason why McDonalds often have the most prominent real estate. They are less reliable at guaranteeing universal access to services that are costly, thinly demanded, time-sensitive or needed by people with limited capacity to pay (like individual medical needs).
Australia’s Pharmacy Location Rules were introduced in 1990 at the behest of the Pharmacy Guild of Australia to limit an oversupply of small urban pharmacies. The rules restrict where new pharmacies can open, and existing pharmacies can relocate.
By orchestrating where pharmacies can and can’t operate, the Pharmacy Guild – which spends millions on public campaigns and outspends the Minerals Council on political donations – is simply doing what an industry lobby group does: protecting its members’ commercial interests.
The larger failure lies with successive governments, which have allowed pharmacy policy to protect owners’ profitability without guaranteeing that all Australians can access essential medicines. Indeed, recent Grattan Institute research found little evidence that the rules have improved access. The clearest effect is protecting existing owners from nearby competition, while doing little to ensure pharmacies exist in places where they may not be profitable.
Grattan recommends abolishing the location restrictions and directly supporting pharmacies that provide an essential service in places unable to sustain a normal business. That’s a good start.
But where private operators still cannot or will not provide a reliable service, governments could establish public dispensaries.
These would be no-frills, publicly owned pharmacies located in community health centres, public hospitals, multipurpose services or modest stand-alone shopfronts. Their job would be to dispense prescription and over-the-counter medicines, provide trustworthy advice, and ensure continuity of supply.
They would not need to sell perfumes, cosmetics, beauty products, confectionery or the shelves of supplements with questionable evidence that commercial pharmacies hock to subsidise the dispensary counter.
Public dispensaries could employ pharmacists on salaries and receive block funding based on the population and geography they serve. Their performance might be measured by access, safety, opening hours and continuity of supply – not retail turnover.
In very small communities, they could combine an on-site health worker with visiting pharmacists, telepharmacy and medicine delivery. In outer suburbs, they could be integrated into public health and community-service hubs.
Public dispensaries could provide a benchmark for the wider sector by providing transparent evidence about prices and managing the kinds of problems people seek pharmacists’ advice for. They might also provide a model for public provision of other essential services in neglected places.
A universal service would be there when people need it. Instead, we have a system in which availability is determined by the invisible hand of the market.
Luke Slawomirski is the Senior Postdoctoral Research Fellow at The Australia Institute.
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