Call For Chemists To Come Clean On Drug Mark-ups
Sydney Morning Herald
Saturday March 26, 2005
Hidden mark-ups charged by pharmacists for prescribed drugs have prompted a call for an investigation into the extra costs consumers pay for medicine.The demand by consumer groups comes as the country's 5000 pharmacists face the threat of a Federal Government squeeze on the subsidised fees they earn through the Pharmaceutical Benefits Scheme.Chemists can increase the money they make on a prescription - doubling it in some cases - where the drug maker or wholesaler provides big discounts on the official price.Discounts of up to 40 per cent off the wholesale price are offered by the distributors of cheaper generic drugs and this practice demands more scrutiny, the Australian Consumers' Association says.On an average drug a 25 per cent discount on the wholesale price could add $8 a prescription to pharmacists' takings, but such discounts are not automatically passed on to consumers.This was because the subsidised drug system disguised the cost of the drug, said Nicola Ballenden, a spokeswoman for the consumers' association.The Consumers' Health Forum of Australia agrees on the need for a review of pharmacy pricing, particularly on generic drugs."Some pharmacies do not seem to be providing the price options we believe are available because they can make better profits staying with a particular brand," said the forum's executive director, Helen Hopkins.An analysis in the latest issue of the consumer association's magazine Choice finds the fees paid to pharmacists "may bear little resemblance to what pharmacists actually do".The regulatory barriers against competition by pharmacies allowed them "to pocket the difference between the 'nominal' price and the realprice of medicines ..." As well there were a series of "arcane fees" paid by the Government to pharmacists, including for efforts to encourage improved use of medicines, for handling dangerous drugs and for extra time in specially preparing prescriptions.Ms Ballenden said the call for more transparency of pharmacy revenues was not just about taxpayers' costs."It is about money going directly out of patients' pockets."Last year's 30 per cent rise in prescription co-payments borne by consumers had not only increased patients' direct costs but also widened the scope for pharmacists to increase their cut.While non-concession consumers can pay up to $28.60 for a standard script, the wholesale price of the drug dispensed can be less than half that figure.A source at the Pharmacy Guild of Australia confirmed pharmacists could get discounts of up to 40 per cent but said these would be on a small number of products, significantly less than 20 per cent of prescriptions. More typically, pharmacists received discountsof up to 3 per cent, he said.Under the PBS the official price is the one the Government uses to mark up to 10 per cent the subsidy it pays to pharmacists.Ms Ballenden said generic medicine companies had told her they had to discount their products heavily just to ensure they got on to pharmacy shelves.The president of the Pharmacy Guild, John Bronger, has denied pharmacies are making excessive profits, insisting that many are facing big rises in property and wage costs. The guild also says pharmacists' share of the $6billion annual cost of the PBS fell from 36 per cent in 1990 to 20 per cent last year.