1 Oct price cuts

Health Minister Greg Hunt has highlighted impending price drops on 24 medicines, as another price disclosure cycle kicks in

But the worst of price disclosure for pharmacies is already “done and dusted,” says one expert.

Mr Hunt says that the price cuts, to take place on 1 October, will save consumers and taxpayers more than $344 million.

The cuts will affect 24 medicines, sold as a total of 226 brands; Mr Hunt highlighted three.

“Pregabalin: around 200,000 patients per year with neuropathic pain will now pay $33.38 per script, a saving of up to $6.12 per script,” he said.

“Valsartan with hydrochlorothiazide: about 4,500 hypertension patients per year will now pay $23.96 per script, a saving of up to $2.18 per script.

“Dorzolamide: about 1300 glaucoma patients each year will now pay $19.18 for these eye drops, a saving of $3.02 per script.”

Last month Guild national president George Tambassis wrote to members explaining that the price reductions announced so far “indicate a revenue reduction of $55.25 million per annum resulting from the 1 October 2018 cycle, equating to a reduction in revenue of $0.19 per script and an average $0.05 per script in lost gross profit from reduced trading terms”.

But pharmacy consultant Bruce Annabel says that “the worst of price disclosure is done and dusted even though modest cuts will continue unless someone changes the legislation”.

“But fortunately the brunt is not borne by pharmacy because of the AHI fee introduced 1 July ’15 insulating pharmacy from the big hits manufacturers and wholesalers suffer,” he wrote in response to a previous AJP story.

“Instead pharmacy loses some generic and wholesaler trading terms only that are now quite modest.

The February 2018 legis lated changes to price disclosure now excludes those molecules that have been through seven price disclosure cycles and any cut would be less than 30%. eg: rosuvastatin 23% cut set for 1 April 2018 didn’t occur.

“Those same legislation introduced big cuts to F1 drugs that are already having a major impact on manufacturers and wholesalers which do indirectly impact pharmacy via supply disruption. Again pharmacy is almost entirely insulated from these through various funding measures ie: a lot of the cuts endured by the supply chain are being given to pharmacy by the wonderfully supportive Minister.”

Discounters and pharmacies with excessive debt are more likely to be impacted by further price disclosure cuts, he says.

He later told AJP that there is still a great deal of confusion about PD amongst pharmacists.

“Some chemists even think it’s finished while others think the world will end when they read some of the sensational media stories,” he says.

“The supply chain is struggling which is why Apotex and Arrow are merging and we will probably see more.”

Pharmacy has been compensated because it has political clout, whereas wholesalers, generic suppliers, generic manufacturers and the pharmaceutical innovative originator manufacturing sector don’t, he says.

“But there is an indirect effect on pharmacy through trading terms being curtailed, service levels adjusted, some resorting to exclusive direct distribution and the stock outs they’re experiencing.

“Another result of the upheaval is the growth in the number of Brand Price Premiums being applied to both originator and generic brands by suppliers. ie: clawing back, through in effect increasing what the consumer pays, some profits lost to both market share and margin.”

Meanwhile, in August Mr Tambassis also warned that as the first of October is a long weekend in NSW, the ACT, SA and Queensland, some pharmacies may have difficulty receiving deliveries immediately following the reduction.

See the full list of affected molecules here.

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