Discount chains ‘distorting’ sector

Free scripts offered by discount pharmacy chains are driving smaller pharmacies out of business, says NZ Guild

Pharmacy Guild of New Zealand chief executive Andrew Gaudin has told the Otago Daily Times that the growth of discount chains is distorting the community pharmacies sector in the country.

Big pharmacies such as Bargain Chemist and Chemist Warehouse are waiving the $5 pharmaceutical co-payment on subsidised medications, with a focus on boosting retail sales to offset losses.

“It is important to understand that the Government collects the $5 charge from the pharmacy, whether or not the patient was charged,” Mr Gaudin told the publication.

“Discount retail pharmacy chains are putting independently owned and operated community pharmacies, that have a greater focus on service provision, under significant financial pressure.”

These impacts have led to smaller pharmacies cutting services, opening hours and staff, and in some cases closing altogether, he said.

The Guild has called on the New Zealand Ministry of Health to step in and remove the government’s $5 prescription charge.

Chemist Warehouse opened its first New Zealand store in 2017, and since then 18 more stores have opened across the country. It reportedly has plans to open 15 more this year. Meanwhile there are nine Bargain Chemist stores across the country.

In late 2019, Chemist Warehouse director Mario Tascone said that if pharmacy regulations were relaxed in Australia, the discounter could offer free scripts as it does in New Zealand.

However Pharmacy Guild of Australia representatives warned that a similar system in Australia could lead to Chemist Warehouse becoming the dominant player in the pharmacy industry, lessening rather than increasing competition in the sector.

Under current Australian regulations, pharmacists can only choose to discount the PBS patient co-payment by up to $1.00. This is not mandatory and it is the pharmacist’s choice whether or not to provide a discount.

The Guild has always opposed the ‘dollar discount’, arguing that it goes against the concept of universality because under the scheme, patients pay different co-payments depending on which pharmacy they visit.

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