‘Preposterous thesis’ in pharmacy attack

One stakeholder has urged pharmacists not to let “cynical attacks” get them down, as a series of articles claims some patients are “footing the bill” on medicines prices and enriching pharmacists

Over the weekend News Corp media published a number of articles about the cost to patients of medicines, claiming price differences are the result of the ownership and location rules.

The articles, by the organisation’s national health reporter Sue Dunlevy, include state-based variations; the Herald Sun version, for example, is titled, “Where you pay $15 more for medicine in Victoria because of where you live”.

The ownership and location rules have “turned pharmacies into multimillion-dollar businesses, with consumers left paying as much as $15 more for the exact same medicine depending on where they live,” Ms Dunlevy writes.

“And it is patients in regional towns left footing the biggest bill.”

The “News Corp Australia investigation” used data sourced from Chemist Warehouse to identify a top 10 of PBS/RPBS drugs by prescription count, also listing a price with each.

“In Victoria, Rosuvastatin costs $23.20 in South Melbourne, $23 in Richmond, $9.95 in Brunswick and $8.99 at Chemist Warehouse in Prahran,” says the Herald Sun. The $8.99 at Chemist Warehouse is listed in the top 10 table.

In NSW/ACT’s Daily Telegraph as well as other News outlets, another paragraph reads, “In NSW the cholesterol beating medicine Atorvastatin costs a general patient just $5.99 at Chemist Warehouse but $20.87 at the Michael O’Reilly Pharmacy in Wagga Wagga, $20 in Gilgandra, $7 at Rumore’s Pharmacy in Bankstown and $12.95 at Ralph’s Pharmacy in Campbelltown”.

Ms Dunlevy writes that Pharmacy Guild national president George Tambassis charges different prices at three pharmacies: “The president of the Pharmacy Guild of Australia George Tambassis charges $12.95 for Rosuvatatin at his Vermont pharmacy, $11.50 at his Cowes pharmacy but just $9.95 at his Brunswick chemist”.

Mr Tambassis told News Corp that “The idea that different businesses with different costs, wages, staff levels and rental overheads should all charge the same price in an open market is frankly unrealistic.”

The Guild noted in a media release that this article bears a strong similarity to previous pieces penned by the same reporter in News Corp media.

For example, this time last year, Ms Dunlevy wrote that “Australia’s drug subsidy scheme is actually inflating the price of many common medicines”.

“The hefty dispensing, administration and handling fees paid to chemists to stick a label on drugs are in some cases five to six times the cost of the medicines they are dispensing,” she wrote at the time.

Meanwhile the Courier-Mail published an editorial saying that Queenslanders would be “rightly appalled” by the articles.

“The Pharmacy Guild makes a reasonable point – different overheads means different prices. That is the free market.

“But the rental rates and wages in these towns are rarely higher than Brisbane. It is hard to believe freight creating the rest of the mark up. It fails the pub test.”

It concludes, “Nobody wants regional pharmacies to disappear. They are essential services in a towns that are too often losing them”.

“But any greedy price gouging will soon lose the support and sympathy of customers and the public and call down changes upon pharmacy heads.”

The Guild has responded to Ms Dunlevy’s articles by pointing out that during the COVID-19 pandemic, community pharmacies have remained open to serve the public and dispense medicines.

“Pharmacies have gone above and beyond to serve patients because they are connected to their communities and committed to the health needs of their patients,” it said in a media release.

“This commitment to our primary health care role makes it all the more regrettable see an unfair and ill-informed attack on community pharmacy by News Corp tabloid newspapers – displaying no understanding whatsoever of the varying costs associated with running a small business or the overwhelming benefit for consumers of our subsidised medicine scheme the PBS.

“The extraordinary thing is that this petty attack on pharmacists gives no credit whatsoever to the skill, experience or clinical responsibility of professional pharmacists dispensing medicines, nor to the need for a small business to be viable.

“The preposterous thesis of the articles in News Corp newspapers is that medicines should be sold in pharmacies for around the same price that they cost. And further, that pharmacies should all charge the same price for under co-payment, non-subsidised medicines, regardless of their cost base, including varying rent or wage costs.

“It is just a fantasy of course, and deeply disappointing that News Corp editors think this sort of attack on pharmacy – year in year out by the same reporter – is worthy of space in a newspaper.”

Mr Tambassis said that “This latest unfair assault on medicine pricing is all the more galling when you consider that pharmacies have stayed open and served patients throughout this COVID-19 pandemic in a way that is immensely courageous”.

“It is quite appalling that a media organisation would focus on why a medicine might be $9.95 at one pharmacy but $10.95 at another at a time when we are at Stage 4 restrictions in Victoria, and pharmacies all over the country are continuing to serve the community with such distinction.”

He had told members in a message on Friday that such an article was likely to appear.

“Maybe they think they are doing one of their advertisers a favour,” he suggested.

“Nil desperandum! We will come through this together, and we won’t let cynical attacks get us down.”

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  1. Matthew Dawson

    Here here well said absolutely pathetic this article and their research is so biased towards spinning their agenda that pharmacists are just glorified dispense techs.

    How about looking at the risks they’ve been taking in staying open all the way through this pandemic and treating people, caring for people.

    News Corp should be ashamed of themselves, but they won’t be, they’ll be patting each other on the back, congratulating sticking it to all those ‘greedy’ Pharmacists out there.

    These articles make me sick.

    Enough is enough.

    Matt Dawson B. Pharm (Monash Parkville)

  2. Anne Todd

    Why doesn’t anyone do an expose on the markup on jewellery/clothes or furniture? is it because the cost price is not transparent to begin with? or is it because people are fine with paying 3 times the cost price for some goods not others?

    ATO Benchmarks
    COG Jewellery 39-50% Pharmacy 64-69%
    Total Expenses Jewellery 76-88% Pharmacy 91-94%

    where’s the profit margin in that?
    Pharmacy does the same as fuel in respect to total expenses with a slightly lower COG, mostly due to our higher staffing and on-costs but the expenses as a percentage of turnover are very similar.

    No one is out there saying independent petrol retailers (not the fuel companies) are making millions or are they (making millions that is)?

    • Matthew Dawson

      Hi Anne,

      Exactly right, gone are the days of setting up a pharmacy in a small suburban centre, maybe next to a local GP clinic where the vast majority of the suburb all come to you for the medication related advice and issues, plus general gossip and news about the days events.

      Then Chemist Warehouse came out with the best business model ever conceived for Pharmacy and were somehow allowed to get away with basically setting up a Franchise Arrangement without any oversight from the Pharmacy Guild or PBA whatsoever.

      Smacks of incompetence at the highest level, they should never have been able to become such a conglomerate, whereby they were sponsors for the AFL umpires in the finals series and at the MCG on Grand Final Day had a “goodies” bag on every seat regardless of age of the person which may have had products that were inappropriate for children or people with allergies or other medications or pregnancy or immuno compromised patients. They got a small slap on the wrist and a bit of a fine.

      The fact that they can dictate terms and conditions to Sigma is laughable at best.

      The only way to prevent the eventually Monopoly in every major Australian city and surrounding suburbs, is to form a group of like minded Pharmacists to approach Coles or Woolworths about setting up a Pharmacy on their premises.

      Use their buying power. Coles brand Panadol. Woolies branded Ibuprofen.

      It would be magical to see the Families behind Chemist Warehouse actually having to compete with someone bigger then themselves for once.

      I also like the ideas coming out of Perth about 5 years back where one enterprising younger Pharmacy owner setup Health Hubs and ditched the normal front of shop stuff in preference for specific focus on 3 different areas of practice Sleep Apnoea, Paediatrics and something else that escapes me.

      Anyway lots to think about. There really needs to be a National Discussion between the Pharmacy Guild (controlled by owners) and the PBA about a pathway forwards the helps other independents compete against CWH.


  3. Bruce ANNABEL

    The Guild is right. The overhead structure of traditionally located community pharmacies varies enormously from that of the hard discounters.
    In fact based on my data that difference is up to 40% less mainly through lower wages and premises costs.
    Patients tend to vote with their feet based on their view of the ‘value’ they receive which we know is more than just the price paid. Principally traditional pharmacies offer location convenience (saves time), long lasting relationships with their trusted adviser and a very different environment.
    And in a number of these pharmacies the pharmacists operate ‘at the front’ and in the healthcare precincts. In other words the most important aspect of ‘value’ is benefits received in more than just a price context.
    So there were a number of ‘elephants in the room’ that the article ignored including:
    1. the different benefits offered in return for the price,
    2. patients at the end of the day are the final/true arbiter of value possessing the right to choose which pharmacy they will visit,
    3. the price variations flagged in the article clearly demonstrate the level of price competition available to health consumers within the pharmacy industry and finally
    4. the PBS prices (refer to pbs.gov.au) are set to ensure the reliable PBS distribution network operates viably plus ensure there’s sufficient remuneration for pharmacists to offer professional service and support to their patients regardless of where they live.
    During the pandemic pharmacies and pharmacists have really come to the fore in helping fearful patients through the crisis proving yet again their relevance in the health spectrum of Australia.

  4. Paul Sapardanis

    Advertorial, for one of their biggest advertisers. Lets not forget what their advertisers end game is. One day everyone will get what they want and they’ll regret it the next day

  5. Andrew P

    I notice that one of the video items explained the price for, I think it was “10mg Amoxycilin”. Getting the strength correct is a really good professional service of the pharmacist not provided by that journalist.

    • Matthew Dawson

      Hahaha yep I think they meant Atorvastatin 10mg but definitely should be fact checking that before it goes to print hahaha

  6. Tim

    Let us not forget that (under copayment) PBS prices used to be FIXED.. ie pharmacists were not allowed to charge less than the ‘agreed’ PBS price.. BUT consumers, Government and others (like the CHF) decided this was no good, and so-called ‘discounting’ was permitted, the result being exactly what the proponents asked for.. market driven price variation.. so what are they complaining about?.. do they want to return to fixed pricing? (ie NO discounting?)

  7. PharmOwner

    While I’m on my soapbox, Ms Dunlevy conveniently leaves out the fact that her “sponsors” derive 50% of their income from non-dispensary sales. This includes vitamins, shoes, lollies, cosmetics and homeopathic remedies ie junk. They can afford to discount script prices to the bone because they make up for it with sales of junk and placebos. Most real pharmacies – which do not sell this rubbish because it is considered professionally unethical to do so – have a much lower non-dispensary sales percentage of 20-30%. But let’s not let the facts get in the way of a good story eh, Ms Dunlevy?

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