The vanishing pharmacist

Pharmacist using computer

A diminishing pharmacy workforce has been an unintended consequence of weighted average price disclosure, writes Peter Feros

Government coffers have swollen by billions of pharmacy rebate dollars via the Weighted Average Disclosed Pricing (WADP) program. But the measure has left a diminishing pharmacy workforce in its wake and risks dismantling Australia’s national network of community pharmacies.

From the 1990s and continuing into the 2000s, community pharmacies obtained wholesaler and generic supplier rebates as part of their trading terms.

These rebates have been progressively reduced with the introduction of the Weighted Average Disclosed Pricing (WADP) program.

The Federal Government’s rationale for introducing WADP was to claw back the difference between the list prices of Pharmaceutical Benefits Scheme (PBS) medicines that it pays community pharmacies and the actual prices paid by pharmacies after receiving the rebates.

Successive governments clearly believed the rebates were not justified nor transparent and simply added to pockets of community pharmacy owners.

Flawed reform

The WADP, euphemistically called ‘PBS Reform’, is fundamentally flawed because it is based on the incorrect assumption that the remuneration for providing a PBS dispensing service without rebates is sufficient to:

  • maintain the Australia-wide network of community pharmacies thatdelivers the National Medicines Policy goal of “timely access to the medicines that Australians need, at a cost individuals and the community can afford”; and therefore
  • adequately fund employee salaries to a level so that this workforce is retained in the community pharmacy sector.

Today’s young pharmacists have demonstrated their intellectual capacity by obtaining entry into a pharmacy degree that requires an ATAR of 90+. They have demonstrated their application to a task by completing a four-year university course plus a one year internship (and a HEC debt of $70k).

How can an award rate of $24.86 per hour be considered fair, reasonable and sufficient to retain such an educated and qualified workforce?

Test the stress

The WADP’s fundamental flaw would have been exposed if a stress test on its application had been undertaken to properly understand its impact on the health of the community pharmacy network and its workforce.

If stress tests can be employed to analyse the commercial health of banks, why was not similar stress testing done on the impact of the WADP?

The WADP’s total impact on the community pharmacy network will take longer to emerge if using pharmacy closures as a guide. Owner pharmacists have many commitments which are not easy to get out of, such as: premises leases; fixture, fittings and plant financial leases; and loan covenants to maintain.

To meet these commitments owner pharmacists will, by necessity, work longer hours and accept lower annual income. A case mentioned in my submission to the Pharmacy Remuneration and Regulation Review was a pharmacist associate working 70 hours a week for an annual income of $15,000! 

So what has been the impact of the Federal Government’s rebates clawback on the community pharmacy employee pharmacist workforce?

Click here for Part 2 of this article

Peter Feros is a pharmacist owner with interests in numerous pharmacies and a director of Ventura Health.

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