‘You’ll get profitable pharmacies to the detriment of the community.’

The pharmacy sector has reacted strongly to a discussion of whether the ownership and location rules constitute red tape which is holding pharmacy back

Last week, the AJP covered questions put to pharmacy stakeholders appearing before the Senate Inquiry into the effect of red tape on pharmacy.

The committee is chaired by libertarian Senator David Leyonhjelm, who asked the Pharmacy Guild’s David Quilty, “What would be the problem with more Chemist Warehouses offering lower prices to consumers? Where’s the problem?”

Also appearing before the committee was industry analyst Michael Rhodes, who has made waves in the pharmacy sector this year with several reports calling for opening up of the sector, including abolishing the CPAs and CSO.

Senators described Mr Rhodes’ presentation as “interesting,” with Senator Stirling Griff going as far as to say, “I actually think it was interesting in an extremely positive way”.

Several AJP readers expressed concern about how removing the location and ownership rules would affect health care in community – and about perceived support for the notion amongst the Senators.

“I am yet to see any hard evidence from any country around the world where predatory pricing, deregulation and free market forces have improved the health outcomes of consumers,” said NMBP.

“The concern for me is that this rhetoric coming from these politicians is getting noisier…”

Reader Dave Wane responded, however, by querying “why should any industry have any kind of protection racket?”

“Australia once had a two airline policy and the most expensive airfares in the world,” wrote Dave. “We also had only one telco and the most expensive phone calls in the world.”

PharmOwner asked him, “have you considered the possibility that Chemist Warehouse could very well end up effectively as a monopoly?” while NMBP expressed their concern about large corporate structures and how they change the market in practice.

“When large chain corporate structures are allowed to enter the market then duopolies and predatory monopolies form. You can kiss the quality use of medicines good buy for future generations Dave. Show me a country that has achieved improvements in health outcomes.

“Just one. To argue that these corporations can be controlled by government policy is quite naïve.”

Dave Wane continued to press the point: “are you against a free and open market? And if so, why? Do you really believe that any business should have taxpayer-funded protection from competitors?
I hope not.”

“Deregulation of this industry will NOT lead to better health outcomes and savings,” responded NMBP, citing what they called the “disaster” of trickle-down economics propelled by 1980s politicians such as Margaret Thatcher and Ronald Reagan.

Meanwhile, Nicholas Logan said he was worried that “Rhodes, Leyonhjelm et al are suggesting that the pharmacy profession completely do away with any semblance of patient focus”.

“No they are not,” said Dave Wane. “Chemist Warehouse provide patient focus.  Anyway, any business that does not provide customer focus may not last long. That, again, is how the market works.”

After expressing his concern about the positive reception of Mr Rhodes’ submission by Senator Griff – “he seems very anti-pharmacy in general, and for the committee to say this is positive seems to me to be extremely worrisome” – Jon Redshaw wrote that “Well yes, because all that matters is cheaper prices of course!”

When Dave Wane remarked that the market would determine what customers want, PharmOwner shot back with, “Smokers want tobacco. Alcoholics want booze. Heroin addicts want heroin. Should we just sell these people everything that there is a market for, and make a profit from it, even if it is detrimental to their health? What about selling homeopathic products?”

Michael Khoo said that small suburban pharmacies in small strip shopping centres – like his own – are often the central hub of such centres.

“We serve the mums with kids, the elderly and disabled, the type of people who are invisible to ‘free market libertarians’ who see only consumers and not individuals,” Michael wrote.

“If the last two decades have taught economists anything, it is that the laissez-faire policies of the Regan/Thatcher era did not result in better services and more competitive marketplace, particularly for the provision of essential public services.”

Mimimomo said that it was important to keep jobs in pharmacy, which might be at risk under deregulation.

“One warehouse open 5 to 10 business collapse, thus less jobs around,” they said.

And Elmo said, “’profitable ones will survive and the market will deal with it’ (Senator Leyonhjelm).

“That’s right Senator – you’ll get profitable pharmacies to the detriment of the community. Well said.”

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