The Pharmacy Monopoly Racket

Yes but the minister’s argument was that because Australia’s total consumption of medicine X will not change as part of this regulatory change, there won’t be any stockout.

Even though people panic-bought toilet paper, they didn’t use more of it. It was the sudden act of increasing their home inventory levels that caused the demand shock and thereby the stockout.

I heard a few pharmacists whinging about this on radio this morning. Their true complaint is money. Less dispensing fees if a prescription is filled once every two months rather than every month. And lower customer visits to get prescriptions filled so less chance to sell all the other stuff chemists sell.

Doctors on the other hand seem supportive, since a visit to get a prescription reissued is a short consult at the lowest medicare claim, and they would much prefer longer consults paying more from medicare. And doctors in general I would think would prefer diagnosing health problems, than doing paperwork that is all a prescription renewal is.


When selling something, political parties of all colours are likely to:

  • Emphasise the benefits of their idea
  • Exaggerate the likely benefits to the public
  • Overemphasise the negatives relating to alternatives
  • Ignore or play down concerns and negatives related to their plan
  • Ignore of play down benefits of alternatives

The press release I linked in an early post is an example of this. Other examples include the advertising that appear at election time.

Whilst there won’t be panic buying, there is risk that the proposal will lead larger queues to see a doctor or pharmacist in the early part of all three phases of the new system and every following September and March.

People wanting to save every dollar might book a doctors appointment in early September to get a new prescription. They then quickly head off to the pharmacy to pick up two months supply if they are concerned that stocks may run out. This will be particularly problematic in September 2024, when people from stage one wanting a second annual prescription queuing with people from stage three wanting their first.

For the participating medicines, there is likely to be a high demand for filling prescriptions in odd numbered months and a low demand in even numbered months.

That certainly ticks your 5 points @Glenn61.


Three other things that may occur:

  • pharmacies would have to hold thousands of dollars of certain lines of stock on the shelves, just by having 2 months of low selling lines waiting on the shelves, rather than one month’s
  • the wastage from changing the dose on a blood pressure, cholesterol or other medicines when the Dr adjusts the dose and the patient has to throw out the remainder may outweigh the reduction of about $5 every second month in dispensing fees
  • if the GP says the patient is stable on a certain dose of one of these 320 medicines and should have two months at a time, then I don’t put it past the health dept to then say that this is a good scenario for pharmacists to continue to initiate repeats for that medicine for up to say 12 months (2 months+ 5 repeats), so they don’t have to return to the GP and cost Medicare another $37 or so for a 5-15 minute consultation.

Not really. The list going on to the scheme are all high volume sellers, these are the ‘forever meds’ that millions of people are on often for life. Once the first peak is dealt with there is no need to have two months (or one) on the shelf, just enough to cover sales until the next consignment comes in which can be whatever interval is suitable.

As above, mostly these are stable prescriptions where people have the same every time. And you don’t necessarily have to throw them out anyway on a change of dose.

This is the slippery slope argument, that we must not allow this to start or it may be then carried on to some invented further degree that is unacceptable. Unless you can show that this will happen it is just speculation.

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Part of the government proposal is to have people able to obtain a script for 12 months supply from a single trip to their GP. This has been one of their main messages in information provided to date.


HI Syncretic, many things in health have been slippery slope arguments. A trial of pharmacist dispensing for UTI and OC’s repeats in Qld now is moving to NSW. It is just speculation but a few of us have worked in government in this field.

It sounds more like a trial to me. All new drugs or medical procedures that we use have been trialled before going into general use. As Wiki explains:

The core of the slippery slope argument is that a specific decision under debate is likely to result in unintended consequences

The extension of a practice that was trialled is an intended consequence.

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I think that is not how I would use the “slippery slope argument”. Unintended consequences of any government policy change are indeed a legitimate concern but are not core to the slippery slope argument as I would use it. The slippery slope is the intended future further policy changes by the government.

For example, “a trial of pharmacists in Queensland prescribing for UTIs” would lead to the obvious slippery slope argument:

But if pharmacists in Queensland can cut the doctor out of the loop and prescribe for UTIs, why stop at UTIs and why stop at Queensland? And why make it a limited-time trial? Why not extend that to a range of other routine and uncomplicated prescriptions? and make it permanent? Yeah, that’s what the government is going to do. We have to stop the government now even on this one small thing because if we lose this fight with the government over a trial relating to UTIs in Queensland, the government won’t stop there and, before you know it, a substantial number of prescriptions throughout the whole of Australia will be written by pharmacists.

The strength of a slippery slope argument rests on the validity of a prediction about the future 1, and the future is always inherently uncertain (but that doesn’t make the argument wrong necessarily). In assessing the validity one might look at

  • what the government has publicly said
  • what the more honest members of the government have carelessly said
  • broader policy documents put out by the public service, and similar documents put out by any number of “enquiries”, and similar documents put out by any number of “think tanks” and “research institutes”
  • past behaviour by the government

1 … and this is also true regarding an argument about “unintended consequences”, particularly where the consequences are dependent on the response by actors who are affected by the policy change.

Emeritus Professor Lloyd Sansom who chaired the Australian Pharmaceutical Advisory Council from 1991 until 2000, and the Pharmaceutical Benefits Advisory Committee from 2001 until 2012, has his say on the Pharmacy Guild campaign.

“There are a range of factors that drive shortages in Australia and internationally, including shortages of raw materials, logistical difficulties including due to natural disasters or batches of the medicine not meeting quality specifications,” he said.

“However, I do not believe that the phased introduction of this new policy will significantly impact the shortage of those medicines included in this policy initiative.”


It is not a slippery slope argument, it is red herring argument.

The real reason the chemists are against this is because they will lose dispensing fee income. I have heard some being honest about this, and not even mentioning the shortage of medication red herring.

Perhaps there are both of those fallacies, and a few more, depending on who is speaking and when, there is no reason those involved are limited to one.

I’ll grant them one slippery slope argument as non-fallacious.

That is getting less income from dispensing medicines will lead to less staff needed.

I feel for them and their monopolistic racket.

Greg I think that the term ‘monopolistic racket’ does a substantial disservice to this (and many health professionals) and in this case their professional efforts with nursing homes, individual deliveries, dose packing, counselling, vaccinations etc i.e. including to the vulnerable and isolated that you may not see over and above the dispensing in front of you.

Costs of running a pharmacy in major urban and shopping centres and carrying hundreds of thousands of medicinal stock etc are significant. Being a small business shopping centre rents are increased based on turnover, rather than margins or profitability, so the dollars may come in but profits are reduced. These businesses have the entitlement to dispense (but so do some other health professionals) but also they have year-on-year increased restrictions on practise and also what they can ethically advertise or sell.

In terms of costs of the current set-up, the Commonwealth spends over $100b per year on health, the entire PBS is a bit more than $10b with dispensing fees being a small part of that, and not substantially increasing, but other areas of health are. For instance what the states and Commonwealth spend on hospitals and medical services are vastly above this and attempts to moderate the MBS growth via individual items have been much harder for the government to undertake as it is less of a broad ‘stroke of a pen’ by a Minister or senior public servant, though they have tried for many years.

But it is also not a ‘monopoly’, about 30000 pharmacists and 5400 pharmacies, largely individually owned and competing on many things, and competition has increased with supermarkets supplying many lines of treatment that were once the preserve of pharmacies.

By using this terminology about this health profession, a natural extension is to say there are monopolistic rackets by optometrists, dentists, physios, speech therapists, occupational therapies, Dr surgeries, surgical colleges etc. i.e all the professions regulated by AHPRA. What happens when oversight and restrictions are less? The current review of restrictions on cosmetic surgeons are a response to some rampant open marketing and reports on 60minutes etc.

I also dare say pharmacy would also be a welcome addition to our current supermarket duopoly (and we currently observe their record profit margins, price inflation and reduced checkout staff). Already we have lost diversity and service from their competing small businesses such as fruit shops, bakeries and newsagents etc., never to return. I don’t know of pharmacists living in mansions and I dare say there will not be tailoring of community services for individual health needs from a large chain, when management reports to shareholders.


Yes, I agree I should not have used that term. I included the term because that was the title of the topic. But I now realise it is an old topic and recent posts are about something different now.

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It is fallacious to say that because pharmacists do good work they cannot also be either monopolistic or a racket. Doing some things that are beneficial to society does not mean everything else you do is also.

Pharmacists are not directly comparable to other community service professions in their commercial practises. In this regard the Pharmacy Guild is very like the traditional trades guilds of previous centuries who did provide services to communities and did certify professional competence but who also kept prices up by controlling competition.

Not really. None of those professions have persuaded governments to support the restrictive trade practices that the Pharmacy Guild has done. The PG uniquely has had accepted ownership rules that prevent ownership of pharmacies by non pharmacists and they control where pharmacies may open to limit competition.

Individual pharmacies are not monopolies but the group engages in restrictive trade practices to protect the collective and the collective is a monopoly. As far as I can determine this is unique to Oz.

Over the years they have succeeded in preventing (for example) supermarkets from having a pharmacy. Wider access and less direct control of premises seems to work in other countries quite well without compromising professional standards.

While I can see that each pharmacy must have a pharmacist present I cannot see why it must be owned by a pharmacist. There are plenty of non-owners who provide good service, so why do they have to be employed by another pharmacist? It is acceptable to have optometrists’ shops and doctors’ surgeries owned by non- professional so why pharmacies?

It depends on the restrictions doesn’t it.

Why do you not share the same fears about optometrists or doctors that can be larger conglomerates owned ultimately by shareholders?

The PG thinks they are somehow special and should not be treated like other professions.


I have different perceptions and experiences and I think I might have to agree to disagree here on some parts of the commentary, but in any case here’s a little more information:

Universities train and currently AHPRA regulates pharmacists, the ‘traditional’ guild apprentice system disappeared more than 60 years ago. This organisation is irrelevant to people becoming registered pharmacists. Also the guild is optional and represents some but not all pharmacy owners, for example Chemist Warehouse has taken different positions on certain professional and business matters. Other organisations of pharmacists are also involved in guiding pharmacists so the Guild is outspoken but not all powerful.

As a couple of other health professions have been put forward as good examples of corporate ownership, I will respond as I do have fears for them as well;

  • the optometry market - which is largely owned owned by two duopoly groupings, the vertically integrated vast multinational Luxxotica (with many Australian trading store fronts) and more recently (and thankfully a more price competitive option) the brand Specsavers. Corporatisation and buy outs have not led to a reduction in the high pricing, Australians in many case are paying more than they should, and people often import cheaper prescription glasses from overseas as the best option for them, as Choice has reported on, or buy a $20 pair of off the shelf readers from a pharmacy (I haven’t seen this cheap option in Luxxotica or Specsavers stores)!

  • GP clinics, where the corporatisation of GP clinics leading to current reports of corporate overcharging and over servicing, outside of GP employee control and gross GP dissatisfaction. It is in such a state that though we turn out more medical graduates than ever before only 17% of graduates become GPs, leading to delays of days to weeks for patients to see a GP and Australian using overseas trained Drs to service many regional areas.

Looking overseas for pharmacy comparisons is useful but fraught, for example we could have unrestricted corporate drug stores that sell cigarettes and alcohol, charge vastly more for the same medicines than what we pay here (unless you are on a plan) and corporate Pharma that advertises on-patent new prescription medicines on tv, but we don’t; I say for the better. Our quality of medicines and services and price for our PBS is well under control compared to most overseas countries, with perhaps only NZ being one of the few cheaper places for total prescription costs but with a much narrower range of government-subsidised medicines.

In terms of restricted ownership, more than 20 years ago during the Hawke years, pharmacies accepted a Government mandated reduction to a 10% margin on scripts, now reduced further for more expensive products, and ownership rules were retained, but on the other hand would a Qantas, Woolworths, Coles or other large corporate have had that imposed or accepted that? Other restrictions are placed on pharmacies that other professions don’t have, such as the relocation of pharmacies being limited, stopping a geographic aggregation in certain country towns, suburbs or streets, with gaps in other towns or areas.

Pharmacies are partly controlled by various professional groupings, and very much by AHPRA, state and federal governments with payment terms dictated to them by health budgets, and no allowance for ‘gap payments’ that others impose. With this tension we are hearing a lot from the Guild at present about further government cost cutting to pharmacies and the impact on services.

Indeed pharmacy is not an apprentice system. And the Guild does not approve pharmacists nor the locations of pharmacies directly but it is a most powerful lobby group that has ensured that governments do it their way.

The operation of pharmacies is governed by the Community Pharmacy Agreement. This is a revolving agreement that is updated every 5 years. It specifies many limits on the operation of pharmacies including the rules on who can own them and where they can be opened.

The latest CPA is here. You will see that it is agreed between:

  • Minister for Health and Aged Care
  • Pharmacy Guild of Australia
  • Pharmaceutical Society of Australia

If you want to sell PBS medicine the CPA is not optional at all and the Guild has had major input to the writing of the CPA. Each time the agreement is renegotiated the Guild run its lobbying campaign and generally it gets its own way. So the Guild does not control who or where directly but ensures that government does its bidding.

Part of the purpose of establishing the CPA was to ensure that everyone has access to the service pharmacists provide and one aspect of that is to have pharmacies in remote areas where from a commercial point of view they would be unlikely to be placed.

I am not suggesting that the location of pharmacies should become a commercial free-for-all because some patients would miss out. Nor am I keen on them selling alcohol or many other irrelevant things found overseas, including some of the worthless non-prescription medicines they sell now.

I have no idea if Chemists Warehouse, or its pharmacists, belong to the Guild but as they sell PBS medicine they are subject to the CPA and so are working under what the Guild negotiated.

In my view the agreement is unbalanced as is too restrictive of competition.

When there is a proposal put up to open a new pharmacy all the surrounding pharmacists are entitled to comment on it. How many other classes of business are asked how they feel about new competition? Why should this apply to pharmacies?

The present government has challenged the Guild directly and the Guild has come out swinging. It will be interesting to see how this goes over the next two years as the present CPA is up for renewal as of 1 July 2025.

If the profession had its way I would believe the profit margin on scripts would be back to 25% as it was in the 80s before the government, a monopsony for the PBS, took it back to 10% or less because it could and charging prices higher than the maximum $7.30 or $30 PBS amounts are simply not allowed. In no way does the Guild ensure the Government does its bidding! The agreement trades and negotiates much smaller issues than that huge cut 30 years ago, and both the Guild and the Pharmaceutical Society of Australia (largely non-owners) and others sit at the negotiating table for the smaller iterations of the CPA since. Others include the Consumers Health Forum etc.

I know of pharmacists who have had moderately successful full-service businesses go bankrupt so the cost-pressures when you are living under a 10% prescription mark-up or less per script are very real and it pushes very loud(!) complaints about further cuts and fortunately or unfortunately many businesses have moved into the higher margin over the counter supplements and perfumes to make ends meet.