Don’t allow CWH monopoly: Guild


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

Chemist Warehouse and media supporters have been knocking heads with the Pharmacy Guild over the potential for free scripts from the discount giant

Earlier this week, News Corp national health reporter Sue Dunlevy published an article titled “Free prescriptions blocked by the Pharmacy Guild of Australia,” in which Chemist Warehouse chief operating officer Mario Tascone said that if pharmacy regulations were relaxed, the discounter could offer free scripts as it does in New Zealand.

This could apply to “select drugs” to which the $6.50 concession and $40.30 general patient copayments, making these medicines free to patients, he said.

This was unlikely to happen, Mr Tascone said, due to the fact that the Pharmacy Guild—“a well-oiled machine and a big contributor to both major (political) parties”—is resisting deregulation.

According to the New Zealand Ministry for Health, each script usually attracts a charge of NZ$5 (AUD$4.67), which does not apply to scripts for medicines intended for children aged 13 and under. After a family has collected 20 new prescription items a year, a prescription subsidy allows free scripts until 1 February the following year.

Chemist Warehouse entered the New Zealand market in 2017, and began to offer free scripts; in June this year, after trialing a similar program in Auckland stores, Countdown – the Kiwi counterpart of Woolworths – decided to extend the free script offer to more locations.

Countdown later announced that it would drop script fees across the entire country, apart from in Invercargill.

And one community pharmacy has “broken ranks” to match the Countdown offer: John Tiong, new owner of the Grant Irvine Pharmacy in Palmerston North, told Stuff that he was worried that if he did not drop the script fee, he would lose business.

Since the News Corp story broke, Mr Tascone and Guild representatives have spoken out in the media about how the free script offer could change the pharmacy landscape.

Speaking to 3AW’s Tom Elliott, Mr Tascone said that at the current time, the discount giant had not yet worked out a business model for such an offer.

“The New Zealand model’s a bit different, the copayments for all New Zealanders, whether you’re a pensioner or a concession card holder is $5.50.

“So when we came in to that market, we said well, let’s work out a business model, can we do prescriptions for free? Can we discount them by $5.50? And we worked it out and we said, ‘yes we can’.”

The group had never considered working out a business model for free scripts in the Australian market due to regulation, Mr Tascone said.

“If the rules were you could discount to whatever you liked, you know, free prescriptions are definitely an option we’d like to put on the table.”

“He’s right,” Mr Elliott said after speaking to Mr Tascone.

Luke Grant, speaking on 2GB, also supported the suggestion.

“He’s a million per cent right, isn’t he?” he said of Mr Tascone. “A million per cent right.

“Damn right we don’t have competition. This is a no-brainer, and just a message to Canberra and elsewhere… this is the important stuff. This is cost of living stuff. This is making life easier for those who are struggling to find an extra quid.

“The quiet Australians are waiting ScoMo, get it done.”

5AA’s Leon Byner interviewed the Grattan Institute’s Stephen Duckett – a longtime proponent of deregulation – who called pharmacies’ inability to discount concessional scripts by more than a dollar “crazy”.

Nick Panayiaris, the Pharmacy Guild’s South Australian branch president, rang in to Mr Byner’s program to explain that the market is already “pretty well” deregulated and an open market when it came to general scripts, as many pharmacies were already price matching: 91% of scripts are concessional, he said.

“The market sort of dictates what people will pay for prescriptions,” he told Mr Byner, saying the Guild encouraged competition.

“We get a bit sceptical on the basis of someone offering something for free. And obviously they’re saying for a few medicines,” he said.

 “We also need to be transparent on the basis that they [Chemist Warehouse] are also preparing for a public float as of next year so I’m sure they will want every advantage they can in marketing and advertising from that point of view in terms of free.

“We encourage competition… but at the end of the day if you allow one dominant player, like many industries, take hold of that industry, generally – as we know in most other examples – that actually leads to less competition rather than more competition.”

And Anthony Tassone, Victorian branch president of the Guild, spoke to Tom Elliott, warning that the New Zealand system has its problems.

“We have a pharmacy group behaving like a big corporate, that don’t like the rules as they are, because it doesn’t suit their agenda or growth pattern – why should we be unravelling the system that has produced equitable access?” he said.

Due to caps on Pharmac, the body which makes decisions about subsidies for medicines across the Tasman, New Zealand is having “all sorts of trouble listing new PBS medicines… because they haven’t funded it right,” he said.

“Why would we want to mimic other systems that actually have these challenges and don’t deliver the outcomes we expect from a world class system?

“We’d have to look at the fine print.”

Meanwhile a Guild spokesperson had earlier told Ms Dunlevy that, “We do not support a zero-co-payment except where a concessional patient reaches the safety net after 60 scripts (soon to be reduced to 48 scripts).

“The medicine payment systems in Australia and New Zealand have significant differences and are not directly comparable.

“As for Chemist Warehouse, it is a standard big corporate ploy to seek to destroy small competitors through ‘loss leader’ prices and then raise prices again once they dominate the market.”

In unpublished comments also provided to Ms Dunlevy and sighted by the AJP, the spokesperson also said that, “We support measures to reduce the cost of medicines for Australians which is why we have been arguing for a reduction in the cost of scripts for concessional patients from $6.50 to $5.50”.

“We do not believe it improves our subsidised medicine system to have the Government-determined co- payment used as a lever of competition

 “We believe free scripts as a marketing ploy commoditises medicines, reduces quality use of medicines and encourages hoarding and wastage.”

The matter has also been discussed on social media.

 

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