Players queue to talk pharmacy deregulation

Retail pharmacy powerhouse Chemist Warehouse has reignited the debate on pharmacy ownership restrictions and territory rights that now protect community pharmacies.

Australia’s largest pharmacy group, with around a 23 per cent market share and $4 billion in annual sales, is challenging the federal government to abandon a deal it is currently negotiating with community pharmacies.

The challenge follows the May federal election result which had a strong focus on cost-of-living issues and reining in budget deficits.

Access exclusive news, features, interviews and reports.

Subscribe now or login to access premium content.

Subscribe Log in

The cost factor

Chemist Warehouse believes it could significantly reduce the costs of prescriptions if restrictions on discounting prices for drugs under the Pharmaceutical Benefits Scheme (PBS) were removed.

The group claims it can offer products to consumers at prices up to 60 per cent lower than they are currently charged.

In New Zealand, Chemist Warehouse has been providing free scripts for pensioners in a bid to build its market share.

The group argues that competition in retail pharmacy would lower costs for the government as well as consumers.

The call to deregulate the retail pharmacy market immediately drew a bid from the Australasian Association of Convenience Stores for its member stores, which include 7-Eleven and Caltex, to substantially expand pharmaceutical product ranges in their stores.

Deregulation would provide a clear advantage to Chemist Warehouse, TerryWhite Chemmart and Priceline Pharmacy, which would all have the opportunity to expand into currently protected local market territories serviced by community pharmacies.

To a lesser extent, Sigma’s Amcal and Guardian pharmacies could also potentially expand their store networks.

However, deregulation could also allow Coles and Woolworths to realise their past ambitions to incorporate in-store pharmacies in their supermarkets, a move that would also be certain to entice Costco and Kaufland and possibly even Aldi.

Deregulation would reshape retail pharmacy and pharmaceutical wholesalers, inevitably forcing Sigma Pharmaceuticals back to the negotiating table with Australian Pharmaceutical Industries for merger talks.

It would no doubt result in the closure of hundreds of community pharmacies, if not, thousands.

It would also be likely to revive plans by both Chemist Warehouse and TerryWhite Chemmart to pursue a public listing on the Australian Securities Exchange. Complex government ownership regulations were a key factor in both pharmacy groups shelving public listing plans in the short term.

Mario Tascone, Chemist Warehouse COO, contends that Australia is the only country in the world with restrictions on retail pharmacy, which is also the only protected industry in Australia.

While Tascone argues that consumers would be better off and the industry stronger and more efficient if restrictions on competition were lifted, he seems to have a lot of work to do to change current laws. While mindful of ballooning budget costs and cost-of-living pressures on families and pensioners, federal Health Minister Greg Hunt is also alert to the importance of pharmacists in healthcare.

In respect of the convenience store push, any relaxation of access to drug products is also a concern, given that some products can be used in the manufacture of illicit drugs.

Hunt is currently negotiating a new five-year agreement with the Pharmacy Guild for 5700 local pharmacies across Australia that would start in mid-2020.

An eye on expansion

The Labor opposition’s policy also supports the existing community pharmacy model and is against deregulation of retail pharmacy.

The guild wants to retain the current industry regulation and to outlaw discounting of pensioner scripts, an argument that Chemist Warehouse may win as a concession in the new pharmacy agreement covering the PBS.

The removal of ownership and territory restrictions for pharmacies would allow Chemist Warehouse to expand into at least 60 regional towns where it is currently prevented from opening stores.

Tascone says the Chemist Warehouse push for deregulation and a more competitive retail pharmacy sector are consistent with the findings of the government’s Harper Review of competition laws in 2015.

Jeff Rogut, CEO of the 6500-store Australasian Association of Convenience Stores, claims prescription medications are high on the list of products and services customers indicate they would like to see added in convenience stores in surveys.

Rogut said some convenience store owners would be keen to replicate the US drug store model.

Comments

Comment Manually

I have read and agree to the Terms and Conditions and Privacy Policy.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Inside Retail Polls

Do you offer staff the opportunity to earn degrees/certifications while working at your business?
Vote

Twitter

Nominations for 2020 Retailer Awards are officially open! Tag retailers you believe provide exceptional customer ex… https://t.co/wkhQq3UjFE

1 week ago

Retail industry bodies including @OZretailers and @retailaustralia are calling on @QldGov to abandon plans to make… https://t.co/8u1zPN0CAg

2 weeks ago

At the @OZretailers national retail awards! Looking forward to see who takes what! #retail #nra #awards https://t.co/T9ZlkgQaFm

2 weeks ago
x

SUBSCRIBE
FREE NEWS BRIEFS Get breaking news delivered