‘Chemists’ accused of pocketing a third of the PBS spend

pharmacy worker reading newspaper

The Pharmacy Guild has condemned a News Corp article which stated that remuneration to pharmacies is just for “chemists to stick a label on drugs”

A Herald Sun article by News Corp national health reporter Sue Dunlevy claims to outline “how a powerful lobby group is pushing up PBS medicine prices”.

“Aussies are being forced to pay up to six times more for vital medicines despite being listed on the PBS,” the article states.

Ms Dunlevy has in the past written a number of articles critical of the pharmacy sector, particularly the Pharmacy Guild.

In the new piece, she claims that “Australia’s drug subsidy scheme is actually inflating the price of many common medicines,” according to the results of an “astounding” News Corp investigation.

“The hefty dispensing, administration and handling fees paid to chemists to stick a label on drugs are in some cases five to six times the cost of the medicines they are dispensing,” she writes.

Using the example of Atorvastatin, Ms Dunlevy outlines the fees added to the manufacturer price of $2.95, including the AHI, wholesale margin and dispensing fee. She gives a total price to the patient of $20.43 for a general patient.

“The price inflation is set to get even worse as the government embarks on negotiating a controversial new five-year funding deal with the nation’s most powerful lobby group the Pharmacy Guild of Australia,” she writes.

“Almost one in every three dollars spent on the nation’s medicine subsidy scheme is now going into the pockets of chemists who have a government mandated monopoly on dispensing drugs.”

She quoted the Grattan Institute’s Stephen Duckett, who said that pharmacy “grossly over regulated and has a subsidy structure that is working against the interests of consumers”.

“The industry regulation is so bad consumers are paying twice or three times what they ought to be paying and they are missing out on the price benefits of drugs coming off patent,” Mr Duckett said.

Ms Dunlevy also spoke to Chemist Warehouse chief operating officer Mario Tascone, who said that the discount giant’s inability to enter some regional markets due to the location rules felt like an episode of ABC public service comedy Utopia.

Mr Duckett has repeatedly called for pharmacy regulations to be relaxed, as has Chemist Warehouse.

In response to the Herald Sun article, the Pharmacy Guild issued a statement saying that due to price disclosure, PBS medicine prices have instead been dropping.

“It is disappointing that the story in News Limited papers today suggests the Pharmaceutical Benefits Scheme dispensing fee paid to pharmacies is merely for ‘sticking a label on a bottle’,” the Guild said.

“This is an unfair misrepresentation of the skill, expertise knowledge, training and responsibilities of professional pharmacists as health professionals.

“The statin atorvastatin referred to in the story is one of the medicines which has come down in price very significantly over the past 10 years. Concession cardholders and pensioners, to whom about 70% of PBS scripts are dispensed, pay no more than $6.50 for PBS prescriptions.

“After they reach the safety net, concession cardholders and pensioners pay zero per script. No concessional patient pays $13.31.

“For general patients, the prices under the general patient co-payment of $40.30 are subject to competition, and the market for these under co-payment medicines is highly competitive on price.

“Sue Dunlevy has highlighted the advertised Chemist Warehouse price, but the vast majority of pharmacies compete on price, and often price match for medicines which fall under the co-payment for general patients.

“The prescription dispensing fee reflects the professional skill and time of the pharmacist in dispensing the medicine according to the required standards of safety and diligence required of pharmacists as registered health professionals,” the Guild said.

“If pharmacists are not remunerated appropriately for their time, expertise and responsibility, pharmacies will not be viable and the many services they deliver in the health system would disappear. 

“Note that at $7.39 the prescription dispensing fee is a fraction of the fee paid to a doctor for a six minute consultation.

“The dispensing fee is not related to the price of the medicine. If a pharmacist spends, say, 15 minutes with a patient who has been dispensed a new therapy—providing guidance and advice— the dispensing fee is still on $7.39, regardless of the price of the medicine.

“PBS medicine prices have come down sharply over the past 10 years through a process called price disclosure which has saved the Government and taxpayers billions of dollars, and reduced the price of medicines for consumers.”

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  1. PharmOwner

    It would be nice if Sue Dunlevy took the time to understand exactly what a pharmacist does, and how little we are actually remunerated. Does she jump up and down when a plumber charges $100 per hour for their time? Or a solicitor $500 an hour for their time? Many of the tasks pharmacists perform are unremunerated. Does Sue Dunlevy volunteer her services to NewsCorp free of charge, or does she work for payment?

    • Mimimomo

      Guild or PSA should educate the MEDIA, there are a powerful tool that influence the government and people. They need to be STOP!! If we only charge anything lower, most shops would close and only discounters remains. Most people would lose the job. I wonder how much she get paid to to make pharmacy look bad. I think she doesn’t own a business too. That is why she thinks pharmacy should charge peanuts and get peanuts. She should be attacking discounters and how they monopolies the markets and their owner are the only people i know who are up so high in Australia rich list!!How can they use the loop hole and make their way there!! Rather than attacking poor independant pharmacy which are already doing it hard.

  2. Jim Tsaoucis

    firstly, the PBS remuneration model works on an average across all item system so you CANNOT pick out single items because it is NOT indicative of the model.
    secondly, most of the money spent by PBS on pharmacy is just reimbursement of what pharmacy has to pay out initially. Nett profit in the dispensary doesn’t cover expenses in the dispensary-it IS a loss leader to get customers into the pharmacy and hopefully buy other items. PBS should be thankfull this system is working to a point, as pharmacy business is really propping up the PBS supply model.

  3. Pilimao

    Any chance we can take legal action against News Corp and Sue Dunlevy for damaging pharmacist reputation without even clearly understand such important vital role of them. If she believes she is correct about her view on pharmacist, then why she doesn’t question why doctors can charge patient over $75 for just writing a script or dentist charges dental clean for over $200 for under 20 minutes.


    The simple fact is that pharmacists have stupidly chosen to discount their own profession thereby reducing their remuneration. Slavishly following big bosses of various copy-cat discount groups that actually suck profits for themselves behind the scenes. You have a protected industry that only a select few can take immense economic advantage of. What do you all expect?
    Doctors & dentists have wisely disconnected themselves from Govt. reimbursement. They are able to work independently and can charge what the market will bear; as a true professional should. They don’t have to wear a namebadge and further study yields greater pay. In this respect, they are far, far smarter.

    • Paul Sapardanis

      100% Correct. All profits to head office in the form of rebates not being passed on to individual store owners. Also this lazy marketing of using professional services as a loss leader is not working ( excludes one big player ). Leaves everyone at store level a loser

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