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The Pharmacy Monopoly Racket

A very interesting article regarding the Pharmacy Guild ensuring that pharmacies maintain their monopoly on prescription and pharmacy-only medicines.

Back when the Cairns Central Shopping Centre opened in 1997, Coles had a section immediately inside the entrance which had a form of timber flooring.

A former Bi Lo regional manager told me that the timber floored section had been installed in preparation for when the supermarkets got approval to operate instore pharmacies, and Coles would simply drop the fit-out in that section.

Obviously that plan never came to fruition.

I also remember that a few decades ago, the pharmacists were crying poor and claiming they were not making any money and the Federal Government cut the number of university places to study pharmacy.

Much more recently I read that it now costs a minimum of around $1 million to open a new pharmacy putting it out of the reach of many salaried pharmacists who only earn around $50,000 P.A.

And now the pharmacists want to be able to issue repeat prescriptions in addition to already being able to provide flu shots.

Nothing like greed and the old vested interest.

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Coles and Woolies wanting to operate pharmacies would of course have nothing to do with greed or vested interest. In my opinion we dodged a bullet when the government decided that Coles and Woolies would not be permitted to go ahead with that.

Everything is always about greed and vested interests.

You think doctors wanting to maintain a monopoly on issuing prescriptions is not? From my observation there are people who are basically on some medication for life and it is intrinsically inefficient to have to go back to the doctor every 5. It is a waste of public health funding and a waste of the doctor’s time and a waste of the patient’s time and it makes everybody else waiting to see the doctor wait longer.

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Why?

The rule that excludes retail chains is that the pharmacy must be owned by a registered pharmacist. How does this protect the public? Note we are not talking about who dispenses the medication, advises the customers or manages the shop, but who owns it.

There seems to be some argument here that ownership confers a benefit to the client. Where is the evidence for that?

To dispense certain medications there must be a registered pharmacist present who must check the dispensing. In certain cases they must also consult the person seeking the particular medication. While this isn’t a perfect mechanism it is better than no oversight at all by someone with relevant skill.

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There seem to be two conversations in progress. Qualifications to do the job, and ownership.

No one has disputed the need for a pharmacist to dispense and/or supervise. The question is whether requiring pharmacist ownership confers any specific advantage or protections to the customer.

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My post was not in support of the supermarkets but in relation to the pharmacists monopoly.

When we moved to Cairns in the late 1950’s, Woollies and Coles (then Penny’s) were variety stores which were side-by-side in Abbott Street, which each having a single shopfront width.

Woollies took over Brisbane Cash & Carry (BCC) who sold groceries and Coles followed suit by also adding groceries, and both expanded to 4 shopfront widths in Abbot Street and 2 shopfronts widths in Lake Street at the rear.

Over time, fruit & veggies, dairy, bread, deli lines, meat, seafood and even fuel were added.

No one protected the grocers when the supermarkets added groceries.

No one protected the greengrocers when the supermarkets added fruit & veggies.

No one protected the bakers when the supermarkets added bakeries.

No one protected the delicatessians when the supermarkets added delicatessians.

No one protected the butchershops when the supermarkets added butcheries.

No one protected the fishmongers when the supermarkets added seafood.

No one protected the servos when the supermarkets added fuel.

But successive Federal Governments have continued to protect the pharmacy cartel despite the recommendations of several reports, thus costing consumers billions of dollars.

You may not see a problem with this disgraceful protection racket but I certainly do.

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Because over time they would reduce the industry to a duopoly. Less competition. Less choice. Shafting their suppliers. Home brands.

It is a prediction about a hypothetical future and hence does not carry the certainty of fact. The above though does summarise why I hold the opinion that I do.

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While our market is quite different from that in the USA in size and concentration, your sentiments were widely held in the USA through mid-last century. Today Walmart, mega groceries, and all the big chains have pharmacies yet after decades there remain thriving ‘drug store’ chains such as Walgreens, Rite Aid and CVS as well as local drug stores.

Reality there is more choice, more competition, and as for the suppliers there, rolling in profits.

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As an example, $1 milk.

That is an example of what? A broken market or raw capitalism or the need to continue managing favoured parts of the economy by regulation? Many forget that the farm gate price was not set by Woolies or Coles, but by the coops, owned by (not Woolies or Coles). One needs a lot of fingers to point at all the players involved in that one.

Counterpoint of sorts, while the $1 milk was being sold, there was $2 and even $3 milk being sold along side it, usually the same product from the same sources just with a different label, and there were customers for all of it.

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An example of what the duopoly can achieve.

I have to take that as proving that one can sell $1 milk next to $2 and $3 milk and the profits continue to flow to the shop and middlemen.

If you want to highlight the plight of the dairy farmer, that was and remains largely in the hands of ‘bottlers’.

Half of the major milk brands are owned by companies in Italy, France and Japan. Of the other half, Coles milk in NSW comes from Murray Goulburn and Norco. Norco sells its own branded milk while Farmers Own is from farmers who deal directly with Woolworths.

Woolworths’ home brand, Pauls, and Farmhouse Gold is supplied by Parmalat (Italian, which is apparently owned by France’s Lactalis). Dairy Farmers and Dairy Choice are both supplied by Lion, which is owned by Kirin (Japan).

Woolies and Coles may be a duology in the grocery business, but the milk supply business seems less clear cut in my eyes. I have read both of them are working to have direct relationships with the farm gate, but that does not much change that there is $1, $2, and $3 milk being sold side by side and why would the chemist business be much different?

Customers are strange and buy for different reasons.

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Yes but my concern was that in many circumstances the larger Supermarkets (well I will call them Supermarkets but they are much much more than that now) quickly use their influence to weaken the rules that try to govern behaviour of businesses. We have had them in Banking, they have currently financial products eg Loans, Mastercard, Visa branded with whatever Supermarket’s logo, Insurance, they have moved into gambling at levels I think most others would have difficulty in getting permission for, they have moved into fuel, hardware, newsagency type retail, alcohol retailing both as takeaway and tavern/bar style and so on. Many of these businesses in the past were more heavily legislated to try to protect consumers and to perhaps a large degree the industries themselves but over time the rules have been changed to suit corporate business instead. They have used their ‘muscle’ to try and keep others like ALDI from getting stores in any proximity to populations. I also didn’t see much attention put on Coles or Woolworths re their participation in Insurance, or financial products during the Royal Commission.

How often do we bemoan the poor outcomes already evident re actions over unethical and/or dangerous conduct. ASIC and the ACCC have often not acted swiftly to address issues we as consumers have had to suffer. I am happy for Coles, Woolies or whomever to sell basic items such as aspirin, paracetamol, antiseptics, cosmetics, and similar lines. But my fear is that here in Australia we seem to slip more than it appears to happen in other countries when it comes to ‘real’ protection. If the owner is a real pharmacist then their very livelihood is placed in jeopardy if they break the rules but if corporate then it is likely only a fine or similar inconvenience to modus operandi.

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I am not sure why home brands are a big problem. If you want to make that case please tell my why it is wrong that I can buy home brand pasta that is just the same as name brand for half the price and how that would apply to pharmacies.

The pharmacy industry is already very anti-competitive. Opening it up to more players is hardly going to make it worse. You are taking the current situation with groceries and generalising it to other systems with other constraints, I don’t see that being the case. People said the two supermarkets getting into selling fuel would be the end of the world. Didn’t happen.

The example of the $1 dollar milk is a red herring that has more to do with how milk products are marketed nationally and internationally than supermarket duopolies. The dairyman is getting shafted but it isn’t all the doing of Colesworths.

Don’t get me wrong, I don’t think having Colesworths in charge is a good thing for the consumer but I don’t see that altering the rules for pharmacy ownership is going to make that happen.

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Neither am I!

The other part of this equation is who do the individual pharmacies purchase from?

The $14B industry supports a number of wholesalers.
How many wholesalers and distributors will a pharmacy deal with?
And just how many choices do they have?

A reasonable answer is a choice of two big ones and some minnows. No different if true to the argument letting Woolies and Coles into retailing will cause prices to go up. They may already be more than we should be paying and just can’t see how it is happening?

I’m not inclined to spend $ to find out more, however there are paid for answers in here?
https://www.ibisworld.com.au/industry-trends/market-research-reports/wholesale-trade/other-goods-wholesaling/pharmaceuticals-wholesaling.html

The market is becoming Bunningised°, by Chemist Warehouse. It’s aim appears is to maximise market share through cost competitiveness…possibly over service or good advice. As Australians are driven sometimes purely by price for many things, the likes of ‘low cost and delivery options’ become successful, at the expense of those who are really interested in knowing what their customer is after.

Disclaimer: I do shop st Chemist Warwhouse, but only for products/medicines I know I am after before entering the store (to me it is a store rather than a pharmacy). I would feel uncomfortable in requesting internal advice as their stores are full of ‘alternative’ theories which are not necessarily proven by science, and think they will pedal (natural remedy) hope rather than solutions.

I also went to our local pharmacy recently (who incidentally matchs Chemist Warehouse prices) and it was a breath of fresh air…someone wanting to talk to me about my aliment and wanting to ensure I knew the effects of the medicine which had been prescribed. Also taking time to provide detailed advice, rather than quickly dispensing prescriptions.

To me Coles or Woollies enteting the pharmacy industry may seem a little to late, as Chemist Warehouse may be how the main retailers would operate a pharmacy store.

° a word made up to make the point.

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Chemist Warehouse has certainly slashed the price of medicines and other pharmacy products.

After I had major surgery around 15 years ago, I was prescribed 20 tablet packs of Tramadol for pain relief which my wife purchased for me at various pharmacies in Cairns.

Every packet was the same brand and same size of the medication, and I kept all the empty packets for reference.

The highest priced packet was from a local pharmacy operated by someone I went to high school with, and it was priced at over $22.

He now owns his own branded chain of pharmacies stretching from Cairns to SEQ,

When I used to go there to pick-up my wife’s late mother’s scripts, the staff would try to force customers to sit at a desk-height counter opposite a pharmacy employee who would try to provide all and sundry information regarding the medication in some sort of attempt to “value add” to offset their disgraceful rip-off prices.

The lowest price for my Tramadol scripts was under $9 from Chemist Warehouse.

When my GP or a specialist gives me a script and informs me what it is, how to take it, when to take, and for how long, I don’t need any snake-oil-salesmen repeating the instructions, or some altered version thereof.

But they did have a loyalty (or disloyalty) program whereby the punters received a small percentage of their purchases, excluding prescriptions, which could be redeemed against purchases of other overpriced non-prescription items, all of which I had looked at were the most expensive in Cairns.

Isn’t it fantastic that these public defending pharmacies are protecting us all from the evils of competition including lower prices, dubious advice from doctors, and all those other conspiratists who would dare seek to disrupt their obviously entitled millionare lifestyle.

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It pays to be wary if anything might be scrimped on because of costs, but. The Chem Warehouse chemists are as fully qualified as anywhere. Be it Aldi, Chem Warehouse or Costco or the next company that disrupts our traditional ‘it must be the GST’ mentality retail landscape, words of doubt are often intentionally or unintentionally used to implicitly discredit them, eg. ‘possibly’.

As an early adopter of Chem Warehouses I have found them to be busier that a ‘local chemist’ because of their prices. Having been a long term customer of two (left the first when a closer one opened) and a casual buyer for convenience from a few others, I have never had a problem with service or advice although because of their foot traffic the staff sometimes could be more terse than a chemist in a small low volume shop. My biggest complaint is that sometimes there is a queue to pay even with multiple registers manned. We customers speak with our dollars and CW seems to be going well in that regard.

Local ‘independent’ chemists charge about double for many common scripts compared to the Chem Warehouses. I have never tried to negotiate prices with them, and the few times we canvassed prices prior to buying none offered to do any price matching. It could be that they don’t, or won’t, or how they conduct their business whereby one has to explicitly ask.

Sometimes Coles and Woolies have supplements on sale much cheaper than Chem Warehouse. As with anything paying attention to the market saves money.

My preference is to get my script and run. If it is not a refill CW have always offered a tutorial if I had not had it previously. I want to buy my script, not have a new BFF although they usually offer that option. In honesty most of the ‘independent chemists’ have a better bedside manner, but I am not happy to pay double for that experience.

Most of our ‘independent chemists’ have similar but less broad ranges to CW. It is business in these times. One of the realities is virtually all ‘independent chemists’ are in a group regardless of how structured. Regardless of the group, as with Harvey Norman franchises one could be brilliant and another much less so. You find a shop you are comfortable and happy with and support them.

I am with @fred123 who wrote it well.

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Yes, one has to explicitly ask. I always check Chemist Warehouse price beforehand to ensure they have price matched.

I am the same…but recently have found many medications now don’t come with information sheets…I usually check online when getting prescription filled at CH, as scant info is given on dispensing. …yes due to being busy and customer queues.

It was refreshing that the local pharmacist took abot 30 seconds to show medications, explain its use, explain its side effects and how to reduce them and also things not to do when taking (e.g. interactions with other over counter medications, alcohol, over exertion eyc.

Ours has very limited alternative therapies but has some beauty and hygiene products, sunscreens, medical devices (thermometers etc), detergents, etc.

The supplements they have seem to be calcium, iron, foltate etc rather than the herbal varieties found elsewhere. They also sell milk and protein powder

Most of their products are significantly cheaper elsewhere. …but being in an aging area, it may be convenient for s ome of their customers.

They also do free home delivery of medications and other items purchased in store.

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I dislike home brands because it obscures the true provenance of the product. It isn’t helpful in terms of the consumer getting information. It may well be the same as a name brand, because it is made by the same company, but you can’t be sure on a week by week basis exactly what the product is. This is particularly difficult if one has special dietary requirements, or if one has dermatological sensitivity.

It may also make product recalls more complicated.

It’s complex, as you suggest, because there are multiple players and the farmers may in part have created their own problem but you know something is wrong when Woolworths is voluntarily putting up the price to $1.10 / L and giving the 10c to the farmer.

Colesworth is well known for screwing the suppliers hard. Only occasionally does a supplier win a fight with Colesworth.

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