CWH to govt: Stop ‘propping up’ pharmacies

Chemist Warehouse Woden, September 2013.
Chemist Warehouse believes there is not enough competition under the current pharmacy model.

Discount pharmacy chain calls on Federal government to pull back regulations, but Pharmacy Guild maintains current rules are beneficial for the public

Chemist Warehouse chief operating officer Mario Tascone has taken to mainstream media to call on the Federal government to stop “propping up” community pharmacies through location rules, pharmacist ownership regulations and limits on discounting.

“It’s the only protected industry in Australia and in the year 2019, these rules make no sense. We’re the only country in the world that does it,” Mr Tascone told The Sydney Morning Herald and The Age.

His comments come as negotiations for the Seventh Community Pharmacy Agreement (7CPA) ramp up between the Pharmacy Guild and Health Minister Greg Hunt.

Mr Tascone said there is not enough competition in Australia due to the current regulations.

He said Chemist Warehouse would welcome competition from supermarket chains if they were able to enter the pharmacy market, because “it will be highly competitive, like any other industry, and the customer wins”, he told Fairfax media.

The discount pharmacy chain expanded into New Zealand in the past few years, and has been able to offer pensioners free prescriptions as incentive to come into their stores.

“We’re not allowed to do that in Australia, we’ve got these handcuffs on us,” Mr Tascone said.

“We’d like the government to allow pharmacies to discount the co-payment to whatever level they want to.”

A spokesperson from the Pharmacy Guild of Australia said: “Chemist Warehouse claims to be wearing handcuffs, and yet they appear to have flourished under the current regulations. It must be hard to make Australia’s Rich List wearing handcuffs, surely.”

The Guild argued that the current regulations are crucial to the community pharmacy network.

“The regulation that underpins our community pharmacy network is beneficial for the public and ensures new pharmacies can be established where there is a community need, and that the pharmacy will be owned by a qualified pharmacist,” said Guild national president George Tambassis.

“The Location Rules are in place to ensure the widest possible distribution of pharmacies so that the network serves the maximum number of Australian consumers.

“The majority of prescription medications dispensed in Australia are government subsidised under the PBS and cannot vary in price by more than $1, so the idea that opening pharmacies in supermarkets would somehow lead to cheaper medicines is flawed,” he said.

“Modern community pharmacies in Australia are part of the health system – the things they do for patients across medication management and health advice and screening do not belong in Aisle 8 of a supermarket, or next to the alcohol or cigarettes that they sell.

“There is ample evidence of competition among Australia’s 5700 community pharmacies. Where prices are not fixed under the PBS, there is strong competition and consumers are able to take advantage of this – and they do,” said Mr Tambassis.

“Pharmacy regulation has also not prevented the proliferation of discount model pharmacies – Chemist Warehouse are proof of that.”

Mr Tascone told AJP he believes Mr Tambassis’ suggestion there is ample evidence of competition is “misleading”.

“There may be plenty of competition in built-up urban areas of Australia because there is a Chemist Warehouse or similar discounter nearby that keeps prices down,” he said.

“But in many regional parts of Australia there is no Chemist Warehouse or similar competitor and people living there always pay more. They have no choice to shop around unless they drive long distances.”

He used Bateman’s Bay on the NSW south coast as an example.

“The town is a closed shop to competition. Residents there have no choice to shop around for affordable medicines because pharmacists in towns like this have a monopoly going with ownership across multiple pharmacies in the one town,” Mr Tascone told AJP.

“Patients there may have lots of access to medicines, but they don’t have any choice when it comes to price for their medicines and it means they inevitably pay more. There are many other regional towns across Australia where this happens. We all know problems happen with high costs of medication.”

Chemist Warehouse says it has identified 60 regional towns where it would open outlets if location laws were relaxed, arguing it could offer prices up to 60% lower than their local pharmacies.

The group recently launched an online campaign to “change pharmacy laws”, asking people to sign a petition to show their support to “revise state and federal laws in Australia”.

“Bring discount pharmacies to regional towns,” the petition reads. “Regional residents could be paying up to four times the price for common prescription and over the counter medications compared to the price paid by metropolitan consumers, according to a recent study.”

Mr Tascone said the petition has been doing “really well”.

However the Guild believes there is no issue with distribution to rural and regional areas under the current model.

“Any objective assessment of the impact of Location Rules since 1991 would find that they have worked to fulfil the Government’s aim – an efficient geographical distribution of pharmacies that provides a high level of access and choice for consumers – including in rural and regional areas – while avoiding costly and unnecessary duplication,” said Mr Tambassis.

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  1. George Papadopoulos

    Under the supposed current ‘lack of competition’ pharmacists are poorly paid and overworked. How shall we address this? Robotics? Huge factory like pharmacies that will never make it into rural areas?

    • Andrew Gray

      That’s the pharmacist job market. That’s different. There’s plenty of competition since the expanded array of university courses teaching pharmacy produces a perennially increasing labour supply, while there’s a fixed number of pharmacies.

      • George Papadopoulos

        Don’t think so – that appears incidental. If pharmacies were doing well, they could hire pharmacists at abysmal rates, but plenty of them so they weren’t working so hard.

  2. PharmOwner

    CWH could always BUY one of the pharmacies in rural areas, if they make an offer too good to refuse to the incumbent owner. But no, they’d rather get in the back door.

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