Price disclosure’s “deep” cuts are exacerbating medication shortages, says head of Advantage Pharmacy and Chemist Discount Centre
Rolling shortages of antidepressants, hyper-tension and cholesterol medications are at least partly the result of generic prices which have been forced too low – and it’s putting patients at risk, according to Steven Kastrinakis, executive director of Pharmacy Platform, which encompasses the Advantage Pharmacy, Chemist Discount Centre and Pharmacy Catalyst brands.
As prolonged lockdowns bring mental health concerns into even sharper relief, Mr Kastrinakis has pointed to increased worldwide demand, particularly drugs used for anxiety and depression while there are rolling local shortages of, for example, sertraline.
He said the heavy concentration of active pharmaceutical ingredients (APIs) manufacture in China and much generic manufacture in India had increased international competition around generics, keeping prices high.
With such demand, he said, international producers are “selling to the highest bidder” while Australia is still trying to buy at lower prices.
While price disclosure had been the right mechanism to help fund medicines in a fiscally responsible way when introduced, he said, there were now growing “unwanted consequences”.
“These price disclosure measures have cut too deep and gone on for longer than intended,” he said.
“I don’t think the intent…was to slash it to this level where the PBS becomes unsustainable in terms of supply.”
“There needs to be a balance,” he said. “We’re buying these drugs on a worldwide scale therefore economics dictate”.
The result of “short, sharp shortages” out in pharmacies was “debilitating and confusing for patients” with “angst caused across the board” as people were forced to deal with “this other hurdle,” he said.
“It’s the patient who bears the brunt of it”.
His comments come as both the medicines industry representative bodies Medicines Australia and the Generic and Biosimilar Medicines Association (GBMA) are in the final stages of discussions with government over their five-year strategic agreements.
Completed in 2017, these are both due to run out in the middle of 2022.
When the Productivity Commission delivered its recent report on the health of the broader Australian supply chain, on the issue of medicines it stated that “intense price competition (especially in the generics market)” was one aspect of supply constraints, noting that “medicine shortages were common even before the COVID-19 pandemic”.
In response to the report, GBMA CEO Marnie Peterson was quoted as saying only that “the GBMA continues to work closely with industry stakeholders and Government on a range of initiatives aimed at mitigating medicine shortages and vulnerabilities in our global supply chains”.
On the issue of price disclosure, Mr Kastrinakis noted that cholesterol drug atorvastatin had been in the $70 to $80 price range prior to price disclosure but had now dropped to a chemist list price of below $5.
“There was margin in it for the supplier,” he said.
“They would have high levels of stock because even if stock expired, they had a greater margin to play with” but now “these guys now have no margin” to risk keeping significant stocks.
The Federal Government needed to accept that the remuneration model needed some changes to change to be able to guarantee supply in such a competitive international marketplace.
He believed Australia should look at rebuilding its sovereign supply of life-saving medicines as well as vaccines but admitted “we can’t turn it on tomorrow”.
“But I think we need to respond very quickly to the shortages,” he said.
Another option, he said, was that there be “some mechanism in place where generic companies are asked to hold a greater stockholding” with some sort of remuneration option to cashflow allow for such a stock buffer.