No. 243

Stone the crows! Pharmacists have a prescription to cure competition.

While the Competition Policy Review acknowledged the sales of prescription drugs must be regulated, it rejected the existing restrictions on who can own pharmacies and competition between them.

Current regulations preventing pharmacists from choosing freely where to locate their pharmacies, and limiting ownership to pharmacists and friendly societies, impose costs on consumers. The panel considers that present restrictions on ownership and location are unnecessary to uphold the quality of advice and care provided to patients. Further, it is clear that such restrictions limit both consumers’ ability to choose where to obtain pharmacy products and services, and providers’ ability to meet consumers’ preferences.

This upsets the Pharmacy Guild, whose members benefit from the existing territorial monopolies:

The location rules ensure that health care consumers have timely and equitable access to Pharmaceutical Benefits Scheme medicines regardless of where they live, rather than having pharmacies clustered around affluent suburbs. The ownership rules ensure that local pharmacies are owned by registered pharmacists, who are health care professionals first and foremost, frequently putting their patients before profits.
Other industry groups endorse the idea of pharmacist as philanthropist.

The Pharmaceutical Society of Australia, “the peak national professional pharmacy organisation representing Australia’s 28,000 pharmacists working in all sectors and across all locations” agrees with the ownership restrictions.

The same with Professional Pharmacists Australia, “the union that represents non owner pharmacists who work in community pharmacies right across Australia.” It wants a review of location but not ownership rules, perhaps because an end to geographic license will make it easier for workers to become owners.

However, not everybody thinks the status quo is good for consumers and the taxpayer. According to the Commission of Audit:
There remains limited retail choice and competition in the pharmacy sector, with a reliance on community pharmacies to dispense medicines. Encouraging greater competition within the sector could be undertaken by moving to deregulate pharmacy ownership and location rules. Such reform would be expected to lead to more efficient delivery and the development of alternative retail models – such as pharmacists available to dispense medicines at supermarkets.
The industry responses to the Commission of Audit last year and the Competition Review last month were predictable, the existing arrangement is in everybody’s interest and anybody who does not think so is a free market ideologue. “It is important that this ideologically driven view be put to bed once and for all. Pharmacy owners, their staff and patients need certainty so high quality services can be maintained,” as the Guild denounced the Harper review.
Um, except other countries demonstrate that the government paying economic rent to pharmacists is not needed to ensure distribution of state funded medicines.
An OECD report on deregulation in Europe found that the price of medicines funded by the state did not decline but that other competition increased as more pharmacists opened in urban areas.

But even if deregulation occurs, the industry has a cunning plan to keep everybody busy.

Rather than just demand to keep their rents, the lobbies are changing the nature of the debate by arguing they should use their monopoly for good by doing more than filling prescriptions.

Sarah McMillan and colleagues set out an expanded role for pharmacists in a 2012 paper:

Pharmacists can better support consumers with chronic illness by assisting them to navigate a disconnected health system in two ways: via a clinical triage role by referring consumers to health care professionals, and recommending non-government consumer health organisations with an emphasis on a holistic approach to care. Furthermore, participants proposed for community pharmacists to ultimately extend their roles in medication management and advice towards health advocacy.

The paper was funded by the feds and part of a research and development programme managed by the Pharmacy Guild. This accounts for the Guild TV commercial last year, which explained how pharmacists help customers with pain management and make house calls, (who knew?).

And it explains, a new PSA project being advised by Charlie Benrinoj, the entrepreneurial dean of pharmacy at UTS and involving eight pharmaceutical companies, “enables pharmacists to shift their practice to provide a stronger focus on consumer self-care, with improved pharmacist-consumer engagement and provision of a range of evidence-based minor ailment and professional pharmacy services.” According to a UTS survey, 76 per cent of pharmacists see services “as the greatest opportunity” for community pharmacies over the next three years.

As a way of justifying an existing monopoly, such community service is hard to beat – the feds might even pay pharmacists more money for the extra work. That is certainly what the PSA has in mind for the Sixth Community Pharmacy Agreement, which covers dispensing under the Pharmaceutical Benefits Scheme, being negotiated now:

The 6CPA needs to incentivise high-quality clinical services and maintain a viable community pharmacy network, while moving away from simply rewarding medication volume. Pharmacists could be remunerated based on the complexity of the presenting consumer’s situation and/or service provided, bringing pharmacists into line with other health professionals

It’s an argument Tony Abbott understood as health minister as he put it:“

The reason why pharmacists are so widely respected is because it’s not just another business, like the coffee shop or the fruit grower; pharmacists are health professionals and as far as the government is concerned, as far as the Guild is concerned, it’s very important that we are always adding to the professionalism of pharmacists, that we are always trying to help pharmacists to be able to better deploy their professional expertise for the benefit of the health care of the Australian people.

But guess which other “health professionals” may not agree. Correct! The Australian Medical Association:

It seems illogical that proposing to pay pharmacists a consultation fee, paid at the same rate as GPs, would do anything more than significantly increase the government’s expenditure on primary health care services. … Rather than pouring more funding into the 6th Pharmacy Agreement in a way that will lead to the fragmentation of health care, the government would be better off investing in general practice by supporting integrated, collaborative and coordinated care.

There are few interest groups which governments respect more than the pharmacy lobby – but the AMA is one of them and I’m guessing that there is no chance of an expanded role for pharmacists under the 6th Pharmacy Agreement. But there will be a consolation prize – a commitment to ignoring the Competition Review.

As Professor Benrimoj once put it; “the market sorts it out for everything other than medicine.”

Speeches written, opeds drafted, cases made. Faster and cheaper than your agency.
Stephen4@hotkey.net.au

ENDNOTES

[1] Ian Harper et al, Competition Policy Review, Final Report, 189 @ http://goo.gl/SNGE9f recovered on April 19

[1] Pharmacy Guild of Australia, “Community pharmacy delivers consumer benefit,” March 31 http://goo.gl/BpGfHt recovered on April 19

[1] Pharmaceutical Association of Australia, “Current system of pharmacy serves Australia well,” March 31 @ http://goo.gl/I80X7l recovered on April 19

[1] Professional Pharmacists Australia, “Employee pharmacists favour location rule review,” March 31 @ http://goo.gl/6GQDwr recovered on April 19

[1] National Commission of Audit, “7.4 The Pharmaceutical Benefits Scheme,” @ http://goo.gl/4H6BDL recovered on April 19

[1] Pharmacy Guild, Community pharmacy delivers … op cit

[1] Sabine Vogler, “Liberalisation in the pharmacy sector,” OECD Directorate for Financial and Enterprise Affairs Competition Committee, March 18 2014 @ http://goo.gl/SaL3Ei recovered on April 19

[1] Sarah McMillan et al, “Community pharmacy in Australia: A health hub destination of the future,” University of Queensland espace 2012@ http://goo.gl/E8CIWT recovered on April 19

[1] Pharmacy Guild of Australia, 30 second TVC October 20 http://goo.gl/JMsI6B recovered on April 19

[1] PSA, “Unprecedented partnership between PSA and industry to transform community pharmacy,” April 12 @ http://goo.gl/TydmEu recovered on April 19

[1] UTS, “Partnership aims to transform community pharmacy,” April 14 @ http://goo.gl/EP86At recovered on April 19

[1] PSA, “Solutions for an effective 6th Community Pharmacy Agreement,” October 2014 @ http://goo.gl/a0E7Mf recovered on April 19

[1] Tony Abbott, “Speech notes for Pharmacy Guild National Conference,” March 2 2007 (quoted in) Stone the crows: 65, March 14 2011. Strange to relate, the original link to the speech now connects to the Liberal Party homepage.

[1] Australian Medical Association, “Integration, not duplication the way ahead for better care,” October 28 2014 @ http://goo.gl/aUXCXU recovered on April 19

[1] Stephen Matchett, “Protected pharmaceutical species,” The Australian, September 9 2011 @ http://goo.gl/wj87R6 recovered on April 19

'2012