Costco incident a warning on corporate ownership


costco storefront lit at dusk

Costco Wholesale to pay US$11.75 million to settle allegations of lax pharmacy controls, including the filling improper and incomplete scripts

The incident highlights the benefits of the Australian pharmacist ownership model, in contrast to corporate ownership models internationally, says Pharmacy Guild Victorian president Anthony Tassone.

A settlement will resolve allegations that Costco’s pharmacies filled prescriptions that were incomplete, lacked valid Drug Enforcement Administration (DEA) numbers or were for substances beyond various doctors’ scope of practice.  

It will also resolve allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralised fill locations, according to a statement from the US Department of Justice.

“Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis,” says US Attorney Annette L. Hayes of the Western District of Washington.  

“A company such as Costco that distributes a significant volume of controlled substances has a responsibility to ensure it complies with regulations that help prevent opioids and other dangerous drugs from being misused or otherwise added to the illegal marketplace.  

“I commend the DEA investigators for uncovering the violations at issue in this case, and working with Costco to ensure that systems are put in place to prevent controlled substances from ending up in the wrong hands.” 

The Pharmacy Guild’s Anthony Tassone told the AJP today that the case provides a warning against corporate pharmacy ownership.

“Where there is a publicly listed or private company, they’re accountable to their shareholders first and foremost,” Tassone says.

“Pharmacist owners are accountable to their patients and their public. So pharmacist-only ownership of pharmacies is in the public interest.

“This is yet another example in a growing list of recent events where deregulation of ownership does not pose any benefit over our current system in Australia.

“The Costco incident is of great concern given the controlled substances that were involved, the systematic failing of their processes and the scale on which they have failed the public.”

Tassone warned that any deregulation of ownership and location in Australia could adversely affect the working conditions, including workplace pressures and remuneration, of Australian pharmacists.

He says that while it is difficult to speculate as to the conditions affected Costco pharmacists were expected to work under, they have a “very important responsibility as custodians of medicines and quality use of medicines”.

“Given recent supermarket pay disputes, particularly with some of their most vulnerable workers, the clear public safety risks with the outcome of Costco’s activities, and ongoing, repeated examples of reduced public access with deregulation of ownership and location rules, there is just little argument for wanting to change the Australian system,” he says.

“Rather than putting patients first, deregulated pharmacy ownership models seem to be more interested in pushing product at a price.”

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2 Comments

  1. Raymond Wilson
    30/01/2017

    I would be very interested in reading several of points of clarification from the erudite Mr Tassone in his responses to this article:

    “The incident highlights the benefits of the Australian pharmacist ownership model, in contrast to corporate ownership models internationally, says Pharmacy Guild Victorian president Anthony Tassone”.

    Can you please describe how almost 80% (I am ‘guestimating’ here) of Australian pharmacies now operate in a business management structure that is not in some manner ‘corporate’? The individual ownership may still remain with the ‘pharmacist owners’ or ‘pharmacist controlled entities’ but what about the Management Groups etc. that in many ways control the activity of these pharmacies? Isn’t this corporate?

    “Where there is a publicly listed or private company, they’re accountable to their shareholders first and foremost,” Tassone says.

    I have noticed (recently in the media) that two of the largest (and most established) Pharmacy ‘Corporate” Management Groups are seriously looking at public listing sometime in 2017. And how will this corporate (public listed company) structure, primarily responsible to shareholders (who may in some cases may even be pharmacists or even patients) resist or be obliged to resist the “deregulation of ownership and location in Australia?”

    And finally, Anthony:
    “Rather than putting patients first, deregulated pharmacy ownership models seem to be more interested in pushing product at a price.”

    This ‘ship’ (“pushing product at a price”) sailed a long time ago!
    It was proudly launched by the pharmacy profession itself.

    PS
    I have no business qualifications, just a pharmacist, so please excuse any misinterpretations on my part.

    • Anthony Tassone
      30/01/2017

      Raymond

      I am not completely sure what your definition of ‘corporate’ is, and whether this is a rubbery figure attributed to pharmacies that are members of a pharmacy brand or franchise.

      Even in these instances, in the eyes of the relevant regulators being AHPRA or a state or territory based statutory authority – the pharmacist proprietor is ultimately responsible for how the pharmacy premises is run. The pharmacist is accountable to the regulator for their registration to practice and the relevant license approval.

      I’m not going to speculate on what you could possibly mean by the ‘management groups etc that in many ways control the activity of these pharmacies?’ or potential listings on the Australian Stock Exchange.

      In Victoria under the Pharmacy Regulation Act 2010 Section 11 ‘Undue influence’ reads;

      “Undue influence
      A provision in a bill of sale, mortgage, lease or in any other commercial arrangement in respect of a pharmacy or pharmacy business that gives to any person other than the person licensed under section 38 to carry on the pharmacy business—

      (a) the right to control the manner in which the pharmacy business is carried on; or

      (b) the right of access to books of accounts or records kept in respect of that business, otherwise than for the purpose of determining whether or not the conditions of the relevant document are being complied with; or

      (c) the right to receive any consideration that varies according to the profits or takings in respect of the business—

      is void.”

      There is a clear legislative intent there regarding to prevent the instances you have suggested of ‘the right to control the manner in which the pharmacy business is carried on.’

      The Australian pharmacy model of pharmacist only ownership of pharmacies and location rules assuring a more even distribution of PBS supplying pharmacies has served the Australian public well and this has been reflected again and again in various consumer survey measures;

      In its submission to the Pharmacy Remuneration and Regulation review, the Pharmacy Guild cited an extensive array of evidence related to consumer views and beliefs about Community pharmacy, with only a sample of this vast feedback shown below;
      • Community pharmacists have consistently rated among the most trusted health professionals in Australia, and have ranked 2nd for the past three consecutive years of the Roy Morgan’s Annual Image of Professions Survey;
      • Pharmacy continues to score highly as an ethical profession, and is ranked 2nd when compared to all other health destinations in Australia;
      • A 2012 survey by the Menzies Centre for Health Policy where participants were asked about their level of satisfaction with their most recent visit to a range of healthcare services found that Australians expressed the highest level of satisfaction with pharmacists;
      • The Client Focused Evaluation Program (CFEP) Patient Experience Survey also demonstrated similar results with community pharmacy scoring an average satisfaction rating of 4.62 (higher than GPs at 4.37 and physiotherapists at 4.56);
      • A recent report by customer satisfaction and ratings agency Canstar Blue, found that 94% of consumers trusted the advice of their pharmacists and 83% preferred to buy their medicines from a pharmacy rather than a supermarket.

      Furthermore in a consumer survey conducted by the Institute of Choice (associated with the University of South Australia) as part of the Pharmacy Guild’s submission to the 2014 Competition Policy Review (Harper Review) a large majority preferred that health professionals owned the practice they work in.

      I’m not sure whether you have visited overseas jurisdictions such as the United States and seen corporately owned pharmacies there. It is a stark difference to the Australian model we enjoy here, and has not proven to deliver any clear public benefit over our Australian system.

      Anthony Tassone
      President, Pharmacy Guild of Australia (Victoria Branch)

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