ACCC clears MediSecure and eRx to collaborate as CEO quits

4 minute read

MediSecure CEO Paul Frosdick quits in the wake of the ruling, which follows the DoHAC’s contentious decision to adopt a direct funding model with a sole supplier.

The ACCC will allow MediSecure and Fred IT (owner of eRx) to work together to transfer prescription data to sole provider eRx.

The decision follows the DoHAC’s controversial decision to make eRx the only supplier of prescription exchange services, after previously encouraging multiple players in the market.

The ruling will facilitate the exchange of data of those currently with MediSecure.

As previously reported by HSD, in May this year the DoHAC awarded eRx the contract to be sole provider of prescription exchange services for PBS-listed drugs, after both eRx and competitor MediSecure developed working solutions.

The $92 million winning script exchange solution was created by Fred IT Group, which is owned by Telstra Health and the Pharmacy Guild of Australia. Telstra Health also owns Medical Director, one of the market leaders in GP practice management software.

The situation flagged claims of anti-competition in a market with only two major providers.

Dr Mukesh Haikerwal, deputy chair of the Australian GP Alliance, went to the ACCC with his concerns about the process.

At the time, Paul Frosdick, who resigned as MediSecure’s CEO this week, said the eRx win “made no sense”.

“[For telecommunications] we’ve got Telstra, Optus and Vodafone. If one falls over, we can all move to another. It’s the same with electricity providers. Critical infrastructure requires redundancy,” he said back in August.

“The other issue will come when the government wants to reprocure it. If MediSecure goes out of business, how in God’s name are they going to get best value when there’s only one organisation capable of delivering all the traction in any negotiation?.”

Mr Frosdick’s resignation was effective from last Monday.

Fred IT’s e-scripts ‘monopoly’ a dangerous precedent

eRx monopoly threatens innovation and security

“It has been a privilege to lead such a dedicated team of individuals and to establish a viable business that is recognised by its peers for its technology and service excellence,” he said.

“While I reflect on the past four years of my efforts and those of my colleagues with enormous pride, the unprecedented disruption to the prescription exchange market convinced me that it was a good time to seek new leadership opportunities, both for me and MediSecure.”

FredIT has pledged “a certainty that e-scripts and SMS will continue without transaction costs; no individual invoicing and PBS online payments reconciliation for e-scripts; that prescribing and dispensing software vendors will receive financial support for compliant electronic prescription solutions and customer services; strengthened cyber security posture and greater protections against clinical risk; and enhanced capacity for all users to innovate an deliver patient focused improvement”.

Opponents criticised the decision for allowing a government model to monopolise the market, but the DoHAC maintained the direct funding model using a sole provider was what was best value for money.

In June, DoHAC first assistant secretary Daniel McCabe said in a submission to the ACCC that the procurement decision “will not be reversed” irrespective of ACCC’s final determination.

In response to submissions criticising DoHAC’s decision to move to a direct funding model and selecting Fred IT as the sole supplier, Mr McCabe reiterated that the procurement process was “based on industry research and engagement…[where] the industry had the opportunity to contribute its views to inform the RFT”.

The decision to select Fred IT as the supplier was made in accordance with Commonwealth Procurement Rules, with emphasis given towards best value for money and “other matters required by the rules”.

Mr McCabe also voiced the Commonwealth’s concerns that some submissions sought to use the ACCC process as a “means of delaying transition” or to “undermine the Commonwealth’s [sole supplier] decision”.

MediSecure has said it would stay in the market to service private prescriptions.

ACCC’s final deliberation on data transition arrangements will be released later this month.

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