Could discount PBS prices become ‘a thing of the past?’


Chemist Warehouse open sign

The Guild has reportedly “declared war” on discounters like Chemist Warehouse, which says the suggested copay reduction would be a “backward step for consumers”

General patients would pay a $19 copayment for prescription medicines from as early as 1 January 2022, under medicines affordability reforms being presented to political leaders by the Pharmacy Guild.

A presentation sighted by the AJP cites National Australia Bank data from 2021 which showed almost 20% of people earning $35,000 or less did not fill a script because they could not afford it.

In 2019-20, more than 900,000 people delayed getting or did not get a script filled due to cost, the Guild says.

“We just need to address the simple undeniable fact that the general co-payment in Australia has completely outpaced the ability for Australians to meet those costs,” Guild national president Trent Twomey told News Corp health reporter Sue Dunlevy over the weekend.

“We have the highest copay out of a basket of countries in the OECD, we have the third highest level of people skipping medications in the OECD.”

The Guild is putting forward a “patient centric” policy reform which it says would improve affordability, restore universality and improve medication adherence.

It suggests two options: either one drop to a $19 general copayment effective 1 January 2022 from the current $41.30; or a phased reduction of the general copayment, starting in January 2022 and reaching $19 at 1 January 2026.

The first option would see the copay return to indexation as per current policy the next year.

The second would see a reduction of about $5 in the copayment each year, then returning to indexation.

Concessional copayments would be maintained at CPI as with the current policy.

The Guild will reportedly campaign strongly for the proposal during the next Federal election.

The Guild argues that the proposal will improve Australians’ ability to stick to their prescribed medicines regimen, thus reducing related health care costs down the line.

It also says that raising biosimilar uptake will contribute to the fiscal sustainability of the PBS.

News Corp media reported this proposal on the weekend as the Pharmacy Guild having “declared war on discount chemist chains like Chemist Warehouse”.

“It sounds like the deal of the century — half price prescription medicines — but there’s a sting in the tail,” Ms Dunlevy wrote.

“…chemists who discounted medicines that cost more than the new $19 patient charge would have to dispense them as private scripts and they would not count towards the safety net — making the reduction to $6.60 impossible.”

A spokesperson for Chemist Warehouse told the AJP that in 2020, there were 96 million scripts dispensed at a price under the general patient co-payment of $41.30.

“This is the ‘competition window’ within the PBS, where pharmacies discount and price match,” the spokesperson said.

“By reducing the co-payment to $19, the capacity of discount pharmacies to offer consumers cheaper prices for PBS prescriptions will be severely restricted.

“This proposal is not about making medicines more affordable, it’s about making discount PBS medicine prices a thing of the past.

“We think that would be a backward step for consumers,” the spokesperson said.

“Why should a consumer be required by law to pay $19 for a PBS prescription when many pharmacies are currently prepared to price that same prescription well below $19, while retaining the PBS safety net provisions for consumers?

“It just doesn’t seem fair or in the interests of Australian consumers.”

 

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13 Comments

  1. TALL POPPY
    27/09/2021

    Yes, well done Guild if that goes through. Would be excellent.

  2. Ron Dymock
    27/09/2021

    Well done Guild . This will preserve the PBS and be a step forward for the preservation of necessary
    social healthcare and away from the drift to the greedy Americanisation of pharmacy .

  3. Philip Smith
    27/09/2021

    Well done Guild, I have always felt the payment was to high vs concession price over 6x more, not sure income needed to achieve a concession rate, but I am sure non concessions card holder are not earning 6x more on average.

    Never thought of the side benefit regarding discount pharmacies.

  4. Charlie Hadchiti
    28/09/2021

    The Guild is always on the back foot when it comes Discount chemists. The Guild is trying to tame the beast now, its a bit too late. Where was the Guild 20 years ago??? To busy protecting their own…. Now the Guild is trying to make up for its wrong doings.

  5. Red Pill
    27/09/2021

    Fun fact: the current dispensing fee being added on top of the cost of unclaimable medications at many discount pharmacy chains are between $3.70-$4.00
    Thats why you’re seeing so many medicines now being sold for $5.60 to non-concession card holders.
    The Guild has realised their own pharmacies will not be able to compete with these volume based warehouse operations for much longer and are trying to fight the inevitable.

    Lets see who can lobby harder. PGA vs Discount et al Round 1

    I would expect few more attempts to tame the discounting beast before they call it quits and sell out.

    • Jarrod McMaugh
      28/09/2021

      Can you expand on this a bit?

      that is, how does your first point lead to your second point?

      I’m taking it to mean that the volume of unclaimable scripts (privates I assume?) that generate a ~$4 fee are large enough to allow the cashflow to subsidise uG scripts so that they can be provided at concession prices.

      is this what you’re saying?

      • Red Pill
        28/09/2021

        Hi Jarrod. Yes that’s my point but not just private medicines. As an example, if you check pricing for popular s4 medicines like Atorvastatin, Rosuvastatin, Clopidogrel, Cephalexin, Amoxycillin, Temazepam, etc
        They’re all priced at $5.60-$5.99 regardless of strength at most discount chains. I personally know the wholesale price they are paying for these medicines are between $1.50-$2 per packet.
        They have significantly lowered the dispensing fee. Some chains are thinking about removing the dispense fee all together if PBS permits them to do so.
        Race to the bottom begun long ago, this is the final phase where 2-3 major operators will remain and independent pharmacies will be the thing of the past

    • Paul Sapardanis
      28/09/2021

      How long do you think discount pharmacies can continue to run on $4 margin? From their statement in the article above it iz obvious that they don’t care about the cost of medicines to the public. What do you think their end game is?

      • Red Pill
        28/09/2021

        Paul I know in Sydney and Melbourne, large,Amazon style, online warehouses are popping up everywhere that are closed to the public. They are literally churning out thousands of prescriptions per day and sending them out across Australia. Their model is based on large volumes being churned out at Small margins.

        Rural pharmacies will not know what has hit them till its too late.

        I know one large chain that is lobbying to remove the dispense fee all together, in order to supply concession card holders medicines for $1.80-$2.

        I think Guild is aware and is reacting to the news.

        • TALL POPPY
          28/09/2021

          This is the very model I alluded to several years ago. And why I am not, and was never, a supporter of the e-script/e-token model as this will enable such operators to perform mass dispensing remotely even easier.
          I do wish the profession would wake up faster! Think about the hidden agendas, the flow of the $$$ behind the scenes…..who does this actually benefit?

          All this digitisation and cloud nonsense for pharmacy will do no good, mark my words. Already we can clearly see the failings and compromises of FRED NXT and now ProjectSTOP making life more difficult for those on the front line.

          To those that remain in the profession…good luck!

          • Paul Sapardanis
            28/09/2021

            I agree. The other is subsidising deliveries. A patient/agent should always collect unless special circumstances arise. We made a big deal about 2 month supply but this is just a big a threat if not bigger. Why would anyone care where a delivered medication come from?

          • Red Pill
            28/09/2021

            Online doctors are also partnering with these large chains, where patients do a quick online consult with the doctor, the eScript is then sent directly to the online warehouse and the medication is dispatched/delivered the same day.

  6. The reality of the situation is that it will cost the government at least 99 million per year for Undercopayment prescriptions (assuming no leakage) and 374 million per year in Over General threshold category (17.2 million Gen RX *$22).

    https://www.pbs.gov.au/statistics/expenditure-prescriptions/2018-2019/PBS_Expenditure_and_Prescriptions_Report_1-July-2018_to_30-June-2019.pdf

    https://www.pbs.gov.au/info/statistics/under-co-payment/ucp-data-report

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