CWH: location rules “indefensible, nonsensical”

Chemist Warehouse
Image by Francisco Anzola

Chemist Warehouse has strongly argued against location rules and removal of the $1 co-payment discount in its interim report submission

Group commercial manager Damien Gance has written a response to the Review of Pharmacy Remuneration and Regulation Interim Report on behalf of all proprietors of the discount pharmacy giant.

He begins by condemning the interim report’s suggestion that the government should abolish the $1 discount on the PBS patient co-payment.

“Access has three distinct dimensions: accessibility, affordability and acceptability,” Mr Gance writes.

“[We] contend affordability in so far as it relates to access is in no way benefited nor enhanced by enforcing a blanket prohibition on discounting of a patient’s co-payment.

“If, for someone in financial hardship, a pharmacy wishes to reduce the cost of a patient’s medication in order to provide ongoing access and to assist them with their medication compliance, this proposal would prohibit such compassionate acts. How could this possibly be deemed improved access?

“Discounting of PBS patient contributions does not create inequity; it creates competition,” says Chemist Warehouse.

“Affordable medicine is not about stropping price reduction, it is about stopping price increases… PBS patient payment discounting must be allowed to continue.”

Chemist Warehouse also argues vehemently against location rules in its submission, claiming the rules are the “root cause of Chemist Warehouse’s inability to provide competitive prescription pricing to every Australian”.

“Removal of these antiquated, anti-competitive and nonsensical rules will immediately free up Chemist Warehouse to bring its competitive pricing to many of the communities for whom we are currently unable to serve.

“Chemist Warehouse contend that the market distorting effects caused by the [location] rules product results that are plainly inconsistent with the National Medicines Policy.

“Their continuation post this review is indefensible.”

The group also lends its support to the sale of complementary and homeopathic medicines, arguing against suggestions such as product segregation, signage, and pharmacist explanation of goods.

In its submission Chemist Warehouse presents the following main arguments:

  • A blanket prohibition on discounting of a patient’s co-payment would lessen access to medicines.
  • Pharmacy location rules are anticompetitive and prevent Chemist Warehouse from providing competitive prescription pricing to all Australians.
  • Product scheduling clearly delineates scheduled medicines from complementary medicines, and if there is a failing in understanding this should be amended through a public education campaign performed by the government, not through enforcing a merchandising standard.
  • Complementary medicines do not pose a risk to consumers when they are not clearly separated from Pharmacy Only and Pharmacist Only medicines.
  • There is no reason why pharmacies should not be able to sell homeopathic medicines.
  • The Panel’s case for the removal of the CSO will lead to greater profits for pharmaceutical companies, and greater costs for medicines that will then be passed on to the patient or government.
  • That any future CPA negotiations must also include Chemist Warehouse. Mr Gance claims that the group’s proprietors are not represented by the Pharmacy Guild, Consumers Health Forum of Australia or the PSA.
  • Community pharmacy programs should be initiated, maintained, run and managed by “truly independent agencies”. Chemist Warehouse argues against the Pharmacy Guild’s QCPP program, saying it is “entirely inappropriate” for QCPP accreditation should be mandatory for access to government-funded pharmacy services when the program is run and owned by a non-independent, non-government agency.

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  1. D.Pharm

    “Mr Gance claims that the group’s proprietors are not represented by the Pharmacy Guild, Consumers Health Forum of Australia or the PSA.”

    Why not?
    Why do the group’s proprietors not take up membership with the PGA (The Guild), PSA or CHF?
    Surely they could have more influence with the government of the day by being members, especially of the Guild. Or perhaps they have tried, and the other Guild members voted against them when nominating for any influential executive positions? Does anyone know?

  2. pagophilus

    Location rules – yes I agree. They’re stupid. How about though we start enforcing ownership limits with orders to sell and serious financial penalties for deliberate breaches?

  3. Mick Rhodes

    Sir, The Chemist Warehouse response is relatively predictable but they do make some valid recommendations.

    Yes: Keep the discount – it’s patient centric

    Yes: Remove location rules – they’re a 26 year old dinosaur of market inefficiency. We’ve called that out in our 2 reports based on extensive research.

    Yes: A public education campaign is required as is an in-store “Atlas” as proposed by The King Review. We called that out in our research also. The PGA have historically been woeful in educating the broader community about what pharmacists can do and the Hall and Partners Open Mind research stated the most consumers were “clueless” as to what pharmacists can do.

    Maybe: There is evidence to suggest the complimentary medicines can have adverse affects if not properly advised by a pharmacist in conjunction with PBS medicines.

    No: The CSO is a blatant waste of money. The issue is distributor efficiency not manufacturer efficiency. If distributor cannot effectively compete in a $17 billion industry they shouldn’t be there. This is why we called for supermarket entry to ensure supply is shored up in the industry. If manufacturers like Pfizer can compete efficiently then others should be on the same playing field.

    Yes: Future agreements should include all relevant parties and be patient centric, not supplier, pharmacist or manufacturing centric. This is why we recommended the VABESMA and VABEAMA concepts which covers the Value Based Efficient Supply of Medicines in Australia and the Value Based Efficient Access of medicines in Australia.

    No and Yes: As Chemist Warehouse ostensibly have little time and respect for the PGA I understand their position on the mandatory QCPP accreditation suggestion. However it draws a long bow to suggest Chemist Warehouse are truly independent when much of their funding is remunerated by the government directly, which as The King Review states that all PBS pharmacies, including Chemist Warehouse, are in fact “agents” of government. This then implies “some level” of accountability should be in place – but not necessarily the suggested QCPP program. It should not be forgotten thus unless you are QCPP accredited you cannot access the funds for clinical intervention services.

  4. Kevin “Kevin” Kevin

    Amazon vs Chemist Warehouse. How far away is this?

  5. D.Pharm

    Thank-you Anthony, that clears up a question I have been asking myself & others for many years.

  6. Jarrod McMaugh

    This also raises the point of the validity of Mr Gance’s reasoning.

    Just because he chooses not to be a member of the Guild, does not mean he can use this point to argue that he should have specifically granted approval to be a part of the CPA negotiations, especially seeing he would have a direct conflict of interest – he would absolutely want to seek negotiations that benefit his business directly (as is his right and this makes logical sense)

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