You would be hard pressed to find a bigger racket than Australian pharmacies.
How many any other industries in Australia have had laws implemented that ban new entrants from opening within 1.5 kilometers of an existing business?
How many other industries allow only registered professionals in the field to own and operate a business?
And how many other industries get to entrench a cartel in a bilateral agreement with the Government every five years?
The release in 2015 of the Harper Review into competition policy recommended that the Government deregulate pharmacy ownership, by dumping pharmacy location and ownership rules, noting that “such restrictions limit the ability of consumers to choose where to obtain pharmacy products and services, and the ability of providers to meet consumers’ preferences”.
Like the Harper review, the Productivity Commission has for more than a decade pushed for changes to pharmacy ownership rules to enable pharmaceutical products to be sold in supermarkets (among other places), and has described the current restricted arrangements as adding “to health care costs for little apparent benefit”.
Similarly, the 2014 Commission of Audit recommended the pharmacy sector be opened up to competition through the deregulation of location and ownership rules.
On each occasion, the rent-seeking Pharmacy Guild hit back hard, claiming that deregulation would give supermarkets the power to compete with local pharmacies, driving independent operators out of business and putting health care second to profit.
Rather than trusting the advice of its various committees and institutions, the Coalition Government chose to side with the pharmacy lobby, deferring the liberalisation of pharmacy ownership rules into the never-never in its response to the Harper Review.
Yesterday, The Guardian’s Mark Metherell penned an enlightening article on the lack of scrutiny and accountability surrounding the Pharmacy Guild, which is deliberately obstructing reform and potentially costing both consumers and taxpayers billions:
For many years, pharmacies have held a favoured place in Australia…
That special status, maximised by their lobby organisation, the Pharmacy Guild, has delivered pharmacy owners political clout that reaches well beyond their customers.
The pharmacies’ status has helped ensure and protect substantial government payments to dispense the subsidised medicines available through the Pharmaceutical Benefits Scheme.
The nation’s 5,500 pharmacies, also protected by local monopoly status, will receive more than $18.9 billion from the taxpayer over the five years of the current community pharmacy agreement. The sum is reached in negotiations between the guild and the health department.
Following mounting criticism and questions about the agreement, the Australian National Audit Office three years ago undertook a performance audit into the administration of this arrangement. The resulting report criticised the department’s capacity to satisfy accountability requirements and protect the government’s interests. The report found systemic problems with the department’s handling of the huge pharmacy budget, including finding “dozens of meetings” with the guild for which the department kept no formal record.
The audit report stated that pharmacy remuneration has not been fully reviewed since 1989 and that the department “is not well positioned to assess whether the Commonwealth is receiving value for money from the agreement overall, or performance against its six principles and objectives”…
The audit report led to a wider government-initiated probe – the Review of Pharmacy Remuneration and Regulation, chaired by economist Professor Stephen King.
The review handed down its interim report this week…
However a crunch question of value – for taxpayers and consumers – remains shrouded. That came about when the guild frustrated the review by issuing a caution to pharmacies against participating in a financial survey initiated by the review team.
The review report states that when it comes to pharmacy funding, “there is little transparency or coordination” for funding from different levels of government, and the survey was to have helped the review assess the costs related to an efficient dispensing service.
During its inquiry however, the review panel became aware that some pharmacy groups and the guild had discouraged members from participating in the survey…
The suggestion of greater scrutiny did not go down well. The guild asserted in a media release that some of the report’s options could, if implemented, “put at risk one of the most trusted, sustainable and best performing parts of Australia’s health system”…
If the Coalition was fair dinkum about ending the age of entitlement, it would have prioritised pharmacy reform, and in the process saved consumers and taxpayers significant money.
Instead, industry rent-seekers like the Pharmacy Guild continue to pull the strings of our government.
