The Pharmacy Monopoly Racket

The Grattan Inst papers that I referenced above say the overseas experience is that. Why is Australia different?

One thing is for sure, the current situation does reduce competition. Opponents of deregulation keep ignoring the question of price competition and harp on regulation being the only way to maintain quality of service - but all we see is that claim no evidence for it.

Does the Guild material in defence look like an even-handed presentation of the facts to you? It does not to me.

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“Free” trade agreements are not about helping the consumer, they’re about helping large corporations. This is why they are negotiated in secret and we generally only know which of our rights have been bartered away for a handful of beans after the event.

Except that every half-decent (non-Chicago-school) study that has seriously modelled totally free trade has found that there would be a few massive winners and everyone else would lose enormously. (Sound familiar?)

Reasonably free global trade is, I suspect, A Good Thing - but one can have too much of a good thing. Totally free trade would lead to a rush to the bottom, in the same way that large corporations now move their supply chains around various countries based upon the ‘cheapest producer of the moment’. That’s chaos, and benefits pretty much nobody.

I do agree with you that trade between countries lessens wars - except that Central and South America and the Middle East have shown that when there is a single global superpower it can do whatever it wants to other countries.

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Australia’s medical and health care system is unlike most others overseas. Any comparisons might also need to find similar starting points for political alignments, demographics and regulatory environments.

I appreciate the reference to the Grattan Institutes recommendations.

As our experiences are predominantly small community it was reassuring to note the GI’s recommendations included:

First, We recommend that the pharmacy location rules be lifted in Urban Areas. 
 Rural Areas are unlikely to benefit from this deregulation and should be exempt from it.

In recommending removal of restrictions on ownership The GI’s recommendation is not without reservation:

Second, We recommend cautious removal of the pharmacy ownership rules
 International experience shows, however, that the savings from liberalisation are unlikely to be shared with consumers and government if removing the ownership rules leads to extreme concentration of ownership, as has occurred in some countries.

This says the outcome is not assured?

Chemist Warehouse is arguing for the changes. Cynically, doubtless to enable expansion in an unfettered market. What odds in a deregulated future CW might become a major donor to both sides of the Houses of Parliament?

The prize is with the PBS, an assured income stream, and more importantly captive consumers.

Are CW in calling for removal of regulation of the dispensing fees/costs (saying they can save one dollar per script) also opening a door to charge more, in particular where there is only one local pharmacy?

In seeking to lower the on costs in the supply of regulated pharmaceuticals is there a Bunnings styled future or something different? Cities dominated by Bunnings while regional areas are left to Small Mitre10’s with high markups and narrowed choices?

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A counterpoint. Today the CW is the low price leader pretty much across the board save for the occasional sale at a competitor. If CW became the local pharmacy Bunnings and then raised their prices wouldn’t it just revert to the current status quo, although with a potential change of ownership and thus profits from owner A (who fell aside) to owner B (CW franchisee and CW corporate)? Would they dare to exceed the RRP that is the basis of most chemists pricing?

A reasonable expectation is the worst case is the current case, is it not? The best case would be lower prices.

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It may come to pass for those who live in a town or city large enough to support competition. Although I have in the past seen pricing in the smaller regional cities across several business operators that suggest unwritten agreements on marketing. Outwardly the answer was the extra cost of delivering service so far from Canberra?

The worse case is for smaller markets. There may only be one option, or eventually none. As prices in the nearest larger community for PBS and other products etc fall, due in part to those customers who can selectively purchase when away, what chance the service is lost to all?

Pharmacy services are not like banking. We all know how that has fared across the nation with branch closures. Currently you cannot order PBS on line or have them mailed? Need a prescription urgently?

With deregulation.
It may be a poor argument to suggest we save likely 10% or so of the population from a possibly worse outcome at the expense of the other 90%. While governments may say we are all equal it’s not how it always turns out. Private or public delivered. Hello, NBN!

P.S.
I fully understand the counterpoint for the larger urban communities. Cheekily- Ultimately, perhaps we should close all regional medical services, and the necessary supporting businesses and empty the rural areas, sending out all farm workers on a daily FIFO from Canberra?

At least then we can save on rural electorate costs and Gold pass air travel for politicians. Every rural electorate will become part of the Capital. Say goodbye to NBN Satellite for home use too! :wink:

For the same reasons the Pharmacy Guild has been able to maintain their protection, the medical professionals have avoided regulation that would ensure maintenance of a higher level of rural and regional access, while avoiding restrictions on concentrations of services to certain cities. Australia’s over supply in an unregulated market for doctors seems to have had little impact in driving down the cost of seeing a GP or specialist (subject to negotiation)?

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While we are comparing protection (or lack of it) on medical and pharmacy practices; how is it that if deregulation would depersonalise pharmacy service to the detriment of the client that this does not happen with doctors?

And if ownership of the practice is essential to this service for pharmacists why does that not apply to doctors? While we are on that topic how exactly is this ownership benefit mediated when so often the owner is absent and an employee is the pharmacist in charge?

That may be a point of discussion raised by the Pharmacy Guild and others. It’s not one I would choose to argue either way. It is also not the comparison I intended, or thought I offered.

I was comparing how regulation of the location of pharmacy services tended to support the services being provided IE physically present in rural and regional areas.

The quality of the face over the counter is subjective. The customers call on that one.

It is an interesting comparison to the registered medical professionals who are not subject to the same location restrictions. There are notably significant recognised problems with getting adequate medical professionals to work in rural areas and to permanently locate outside the major cities.

In a deregulated environment would Pharmacy Services to rural and regional areas suffer the decline as we have for medical practitioner services, that are not regulated as to location?

In the opinions of many in rural and regional areas a system of regulation of where Doctors can Practice would be one way forward. Not necessarily one the AMA supports. It has resisted numerous differing approaches from government to encourage more Doctors to swap the Audi for a Hilux? The exception has been the import of immigrant Doctors gaining temporary visas leading to residency in return for doing their time in the bush. A revolving door of which doctor today if you live in the bush. All great professionals, although missing certain experiences due to where they may have trained. A sad tale given just how many doctors Australia trains each year.

Would deregulation of pharmacies lead to a similar rural shortage and revolving door? Worse given they are likely just another employee.

Registration as a Medical Practitioner is regulated! It is Legislated.

What is the difference between a registered practicing medical professional, practice by a registered medical professional, and the place the practice is carried out?

How is a practice structured?
What follows seems to be straight forward.

We can all draw our own conclusions or ask a lawyer who specialises in medical law how it comes to be.

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Discount chemists the new Uber: Former ACCC chief backs pharmacy deregulation

“Former ACCC chief Graeme Samuel has slammed governments for bowing to the Pharmacy Guild’s “political blackmail” at the expense of consumers, calling for deregulation to open the sector to competition and deliver cheaper medicines.”

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And now the greedy pharmacists want to get their snouts into the Medicare trough.

Whilst former ACCC chair, Graeme Samuel, calls for the ACCC to take the pharmacy monoploy to task, much to the disgust of the same individual wanting to get the pharmacists into the Medicare trough.

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So now they want to be paid for the services that are part of the package provided by the restrictions on ownership and co-location. Appetite grows with eating.

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I see that there is an article in The Conversation about supermarket pharmacies - but it seems focused on competition and ‘efficiency’ rather than consumer outcomes.

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I didn’t get that. I thought consumer outcomes such as whether safety, professionalism and competition would be maintained or enhanced were all covered.

I am wondering when will get some solid explanation of just how the Guild maintains its power over government and us. I would like to see some investigative journalism in this fight.

It looks to me that behind closed doors the guild threaten to campaign against any government that tries to open up the market using all the safety and security furphies. Governments don’t want to take on another organised and well funded lobby group so they cave every time using the canned excuses provided for them.

If it is all about professionalism and looking after the client why is it that the same restrictive rules do not apply to doctors?

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  1. Because there are even more Doctors than Pharmacists.
  2. Because The Doctors Medical Profession is even more organised and connected and wealthier than the Pharmacists.
  3. Because if you are Doctor living in a major city or centre it is just so much more appropriate for your life style, sorry, I meant professional development.
  4. It’s too hard for a rural based Doctor to source a Locum.
  5. Who wants to live as a Doctor in a rural community and be on call 24x7 for the rest of your life. Did we mention limited resources and support for emergencies and special circumstances.
  6. And for most Medical Doctors who genuinely care about your profession, country folk generally earn less, so charging more is not a solution.

Some evidence of the power of the Doctors is in how the Government acts to regulate and manage the fees charged by GP’s and Specialists. Not!

P.s.
@syncretic, it’s a great question, that asks more about how best to deliver readily accessible, proper and adequate medical services and support to all Australians at a fair cost. It is a much bigger concern than delivering cheaper pharmacy services to Sydney and Melbourne, if that at all is a reasonable outcome.

Fix the substandard healthcare outcomes for rural remote Australia with the delivery of reliable and affordable and accessible GP/medical services outside the major cities and centres. The Regulation of Pharmacy location and ownership is simply the last line of defence, against a further contraction of the services to the larger centres.

Is it enough that the same general population of Australian’s have the lesser of the NBN outcomes, underserved and over charged.

If I was a Pharmacist, and I am not.
Note most Pharmacists paid highly to buy their current business. It’s like super or life savings to the owners. What resale value if government changes the rules? Not a lot different from Government resuming your land as they did in the old days for a pittance based on the unimproved nominal value. Wait, they can’t do that any more, can they?

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Another article regarding exorbitant prices for prescriptions in regional areas.

Of course, the pharmacists blame everything but their own greed.

Just as well that Chemist Warehouse and others provide online shopping.

Once upon a time buying a news agency was the key to a solid income and retirement. Today? Taxi licensees recently found the real value of their investments. How about highly skilled graduates who instead of secure jobs have found themselves in the gig economy even while performing at their skills, an hour here and an hour there or for those lucky enough, non-ongoing or short term project contracts.

Then there is the reality of regional life where the economies of scale be it volume or population or both are insufficient to make a case for most anything any more unless it is subsidised and regulated.

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turn to buying online

? Online? OMG. They make it sound like this is a strange or undesirable thing to do.

That’s the market working as it is supposed to.

For an apples to apples comparison however the article should have mentioned what the delivery cost is, if any.

It is unclear whether buying online for a prescription medicine is really valid. Does the seller verify that you hold a script, unexpired, with remaining repeats? update the number of repeats? It is very many years since I did this.

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Here is the webpage for Chemist Warehouse which outlines the procedure for buying prescriptions online and also states free shipping for orders over $50.

https://www.chemistwarehouse.com.au/prescriptions

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What happens if you fail to do the last step (Step 3)?

That looks a bit “sharp” by Chemist Warehouse. Once they get your prescriptions, they have essentially locked you in and prevent you from buying elsewhere.

A fair comparison would look at lead time. You walk into a pharmacy and get your product immediately. You order online and, ignoring any additional problems caused by the prescription, lead time is 1 business day (realistic minimum for now) or for the region as per the article (Mt Isa) realistically several business days.

The government could solve all the prescription problems by having prescriptions exclusively online BUT given the government’s appalling track record for design, implementation, security and privacy in IT systems, I could not in good faith suggest that.

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On the face of it this is an interesting example of a perverse outcome of successful lobbying.

Pharmacists emphasise that they have a key role in considering the patient’s whole position regarding the pharmacology of their medical treatment and in advising on side effects, interactions and alternatives. All this is true.

They work very diligently and effectively to maintain their monopoly and privileged position - for the benefit of their clients of course.

This activity includes restricting competition which arguably is actually restricting the supply of the service that they claim is so important. Now we see that further it drives people away from benefiting from the ‘free’ service at all because they cannot afford to pay the price for drugs and dispensing that goes with it due to the pharmacists’ own anti-competitive behaviour. Well maybe.

However the article presents complications that suggest the situation in remote communities is not that simple. On the one hand the existing vendors say their customer base is small (we are not doing too well, maybe there are too many of us) but that attracting qualified people to work in the business in the region is very hard (we need more staff). So what exactly is the problem and how does it explain why their prices are too high?

On the whole not a very coherent article that does little to shed light on the problem. I would be interested to know how the mail order pharmacies are faring in general and whether the price difference is driving a trend away from personalised service and advice. If that can be shown to be the case then the pharmacists have been too successful.

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In that general situation, if you think there is a problem, then you would lobby your local MP to refer it to the Productivity Commission.

One point that the article makes - and in no way am I qualified to claim that the statement is either true or false in the pharmacy industry - is that in regional areas the lower sales volumes mean that the negotiated wholesale purchase price is higher.

The article notes that the three pharmacies in Mt Isa are all “independently owned” but does not clarify whether they obtain their stock through a buying group (but perhaps, if they do, it is one without branding).