A new threat to dispensing revenue has emerged, with a Grattan report stating price disclosure has not gone far enough or fast enough.
It calls for radical cost-saving measures based on international benchmarking, and author Dr Stephen Duckett has told Pharmacy News he would like this to be included in the May Budget.
Dr Duckett also makes a case for the overhaul of pharmacy location rules to increase competition.
His report has provoked a furious response from the Pharmacy Guild, the PSA and wholesalers, who say it does not acknowledge the deep impact price disclosure has had.
The report claims $500 million a year could be saved if the wholesale price of generic and off-patent drugs was based on the best price internationally rather than the current price disclosure model.
It would save an extra $93 million in 2017-18 alone under price disclosure.
More than $445 million per year could be saved by adding 11 more drug groups to the therapeutic group premium policy, Dr Duckett writes in the report titled Cutting a better drug deal.
Price disclosure has “not gone far enough or fast enough” and the government should ”grab the low-hanging fruit,” he writes.
He told Pharmacy News, however, that international benchmarking and proposed changes to the therapeutic premiums policy could reduce pharmacists’ income through reduced mark-ups.
He hoped the federal government would use the savings to bring new drugs onto the PBS.
“They could just take it to the bottom line but it may be an easier sell if they used it to bring new, proven effective drugs onto the PBS,” Dr Duckett says.
The report also calls for:
“Carefully relaxed” location rules to increase competition in retail pharmacy. This would lead to pharmacy mergers and reduced costs for pharmacies and lower prices for patients.
An expanded healthcare role for pharmacists to help mitigate the fall in income caused by the proposed reforms. The report suggests pharmacists take over vaccinations, review and adjust medication doses, prescribe repeat medications and work with GPs to manage chronic conditions.
The proposals have been widely condemned by the Pharmacy Guild, the PSA and wholesalers.
A Guild spokesperson says the same report is released every couple of years with updated numbers.
“You can’t have all the benefits of the Australian system but super-impose a cheap price here and there that might come from a system that is no-where near as good.”
Guild executive director David Quilty says the report doesn’t recognise the “deep impact” of price disclosure on community pharmacy.
The government has saved an estimated $20 billion in five years through price disclosure. Australian mark-ups are competitive with those overseas, he says.
Mr Quilty also rejected claims location rules are against public interest, reiterating the Guild’s position that consumers enjoy a high level of access to community pharmacies.
PSA national president Joe Demarte says accelerated price disclosure would threaten the viability of community pharmacy and put downward pressure on wages.
But he welcomed the call for a wider health care role for pharmacists.
National Pharmaceutical Services Association (NPSA) chairman Mark Hooper says the report shows little understanding of the enormous pressure on the pharmaceutical supply chain system.
Less than 10% of PBS medicines are now profitable to distribute and further cuts would “threaten the accessibility of medicines for Australian patients“.