Following on from yesterday’s post on the Pharmacy Guild’s indefensible attack on minor changes to the way in which the Government pays for Pharmaceutical Benefits Scheme (PBS) by shortening the time limit required for drug manufacturers to disclose the price at which they sell medicines to pharmacists to 12 months from 18 months, three groups – Choice, the Consumer Health Forum, and the Australian Council of Social Services – are today launching a joint campaign claiming that Australians are paying far too much for drugs due to profiteering by pharmacies.
In the above interview aired today on Radio National, Choice CEO, Alan Kirkland, has outlined the group’s concerns, noting that:
- Pharmacies receive $3 billion per annum from the Government to dispense PBS medicines;
- Pharmacies earn fat margins – around 70% to 80% over cost – on many PBS medicines;
- These fat margins are derived, in part, because as pharmaceutical manufacturing costs fall, pharmacies are continuing to receive the old manufactured price from the Government.
- Shortening the time limit required for drug manufacturers to disclose the price at which they sell medicines to pharmacists is necessary to ensure transparency on drug pricing and costs, to lower costs for consumers, and to ensure the financial sustainability of the system;
- Australians pay roughly twice as much for drugs as consumers in NZ and the UK; and
- The Pharmacy Guild’s scare campaign threatening lower levels of service and reduced hours of operation is not justified.
As noted yesterday, the Productivity Commission has for more than a decade been pushing for changes to pharmacy ownership rules to enable pharmaceutical products to be sold in supermarkets (amongst other places), and describing the current restricted arrangements as adding “to health care costs for little apparent benefit”.
Accordingly, threats around lower levels of service and reduced operating hours arising from these changes can be easily overcome by permitting pharmaceutical goods to be sold in 24-hour supermarkets, as occurs in North America and much of Europe. Increasing competition typically leads to lower costs and improved service levels for consumers.
