Healthy Skepticism Library item: 454
Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.
Publication type: news
Frenkel J.
Clampdown on chemists to save $8b
The Herald Sun 2004 Jun 21
Full text:
Drug company and chemist mark-ups under the Pharmaceutical Benefits Scheme could be halved under a 10-year plan to save taxpayers $8 billion.
And kickbacks to chemists such as expensive wine and car competitions would be outlawed under the radical plan to overhaul the PBS.
The current deal with chemists expires in July next year and Health Minister Tony Abbott has put the industry on notice.
Medicine wholesalers and chemists are paid a 10 per cent mark-up on every PBS script under the agreement.
The deal means taxpayers pay more to wholesalers to distribute medicines
that would otherwise be cheap and easy to pass on to pharmacies.
When asked about the inventory deal in a recent interview with the Herald Sun, Mr Abbott said: “While we think the pharmacy agreements up until now have delivered good outcomes for everyone, we are conscious of possible savings.
“We’ll be looking at that in the context of renegotiating the agreement.
We want to get a good deal for taxpayers as well as a fair deal for pharmacists.”
Pharmaceutical wholesalers reaped more than $420 million from taxpayers through the PBS scheme last year.
They use large profit margins to offer chemists huge discounts for buying PBS stock, orders that come with lucrative gifts and expensive prizes.
Mayne, for example, last month ran a competition with two Mazda RX-8 cars as prizes for chemists purchasing over-the-counter medications.
Harvey Norman gift vouchers worth $5000 were also part of the prize pool. Other gift schemes run by wholesalers include:
A $400 bottle of Grange Hermitage for chemists placing large regular orders.
BIG discounts and a $100 Coles Myer gift voucher for stocking anti-acne drugs.
A POINTS scheme rewarding big-selling chemists with travel or cash.
The kickbacks are not illegal, and are not necessarily a direct use of taxpayers’ money earned through the PBS.
But the Howard Government is trying to jack up script prices by 30 per cent, saying the ballooning growth of the $5.4 billion PBS is unsustainable.
The sweetheart deals are widely viewed as the wasteful end product of a lopsided contract between the Government and the Pharmacy Guild of Australia to operate the PBS.
The planned changes put the Government on a collision course with thousands of chemists in an election year.
One option is reducing the wholesaler and pharmacy margins from 10 per cent to five.
Paying wholesalers a flat fee rather than a percentage cut of the drug price is another option.
Filling a script would not cost any more under the changes.
Patients will still pay $23.70 for most medicines, with pensioners and concession card-holders paying $3.80.
