In the heart of Sydney, six men in suits meet. Three of the men are from Big Pharma and three are from a large pharmaceutical chain in Australia. The subject of their discussions is the price for which the company will sell their generic medication to the chain.
As the Pharmaceutical Benefits Scheme price paid to the pharmacies is set by the Government, every cent they can obtain the drug for below this price is money in the pockets of the pharmacists. They find it easier to negotiate a “good” price with more pharmacies in their group. This advantage has led to the rapid spread of pharmacy chains across Australia.
But why does this matter? Doctors determine the medications we receive don’t they? That’s where all the attention is focused, with clear codes of conduct, etc. This is true: the doctors choose the medication but they do not choose the BRAND of medication. Even if a doctor writes a prescription for a generic the pharmacist determines which brand the patient receives unless the patient insists on receiving the brand the doctor prescribed.
The pharmacist has another bargaining chip to play in their negotiation over price — the promise to limit the pharmacies in the chain from dispensing other brands, including generics, over a set period. They have found in the past that the line “I don’t have that brand but can get it in for you in three days” works well to direct most patients to the brand of generic they wish to sell.
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There is no media or any other scrutiny and no code of conduct for such negotiations. Such is the power of the Pharmacy Guild, most people aren’t even aware this process occurs.
In another part of Sydney, 120 doctors are ushered into a ballroom where a $100 per head dinner takes place. The guest speaker has been chosen and briefed by the host — Big Pharma — but is an expert in his/her field and answers questions from a knowledgeable audience.
Such events occur all over the country. In some regions the only contact the local doctors have with such specialists is via this method. The doctors all leave, having received entertainment valued at less than 0.0005% of their gross income: hardly sufficient to influence their prescribing pattern. The media cover the event and it is reported and scrutinised carefully by the watch dog established to enforce the code that covers such events. Total cost: less than $150,000.
There are 4200 pharmacists in Australia, with over 167 million prescriptions issued on the PBS in 2006-2007. One dollar saved on each script via discounted generics puts close to $40,000 in each of their pockets per year.
Does this arrangement receive scrutiny? Why should the pharmacist choose the specific generic the patient receives? Why does the Federal Government via the national prescribing service (NPS) advertise for people to choose generic medicines when all the financial benefit for doing so flows into the pocket of the pharmacists and not the people?
Does the supply of generic medication, a different size and shaped tablet, each month, cause patient confusion and medication error? With the impending negotiations in relation to the next pharmacy agreement, perhaps this situation can and should be corrected.
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Having been state manager for the then major distributor of pharmaceuticals in Australia I can vouch for the sentiments of the story.
Ask your pharmacist next time they offer you the cheaper generic – “How much cheaper?” – the answer will be small – last time it was $1.90 for me – then ask – “how much more do you make in profit than the branded?” – and watch them run. The truth is the pharmacists were getting 30-50% off the price than the comparable branded product. So if the branded was $20 the generic was say $10 – and sold at a couple of bucks lower so an extra $8 would be available – so the incentive is to save money for the client – bah humbug – more profit to the pharmacy.
Also ask how is it that a 25 year old pharmacist can buy a $4 million pharmacy with no assets and minimal income? Happens dozens of times a year in this industry – I pity the poor GPs who are scrutinised to buggery, yet pharmacy has an amazingly powerful voice in the Pharmacy Guild to protect and lobby for it. Worth every penny of subscriptions it receives.
I have concerns over the whole issue of authenticity of generic drugs having come across the problem while living in the US and recently here when the paracetemol I was giving my daughter who had a high fever – a chemist own brand had no impact but when I used the one branded tablet I had left her temperature dropped only to re-elevate when i switched back to the non branded one. It seems that authenticity of drugs is given so little attention – indeed pharmacists in the US successfully lobbied to ensure that no authentication measures such as RFID were put in place as they considered it an unneccessary cost. Tell that to the cancer patients in the US who took an expensive cancer treatment drug which turned out to be fake. There is a lot of work that could be done on the whole issue of market power, authenticity, tendering processes in the pharma area but you need a lot of political will…. So dont expect anything to change anytime soon.
I now a pharmacist who earns well in excess of $1m per year. He knows that he is overpaid for what he does and knows that the gravy train will end eventually.
The government needs to step in now and allow the major supermarket chains and other competitors to set up their own pharmacies in their shops so as to drive down the cost of script to everyone.
I am going to begin retraining as a pharmacist this year, and have been trying to get my head around the Australian pharmaceutical industry for a while.
Having read posts and articles on Australian pharmacy sites, and by seeking out pharmacists, it seems to me that many pharmacists are unhappy with the ‘corporatisation’ of their profession. Many pharmacists (employees in community pharmacies) are unhappy with the workloads they are expected to handle and the little time this allows for patient consultations; they feel like script-filling automatons.
It would be the owners of pharmacies (who must currently be pharmacists themselves) who would benefit from the increased profits that may flow from the generic substitution deals discussed in this article, not the many pharmacists who are employed by them.
I think there is an important role for the pharmacist in our health system, however I’m worried that the Pharmacy Guild is more concerned with the interests of pharmacy owners than with pharmacists more generally, and that this is giving the profession a bad name.
Having been state manager for the then major distributor of pharmaceuticals in Australia I can vouch for the sentiments of the story.
Ask your pharmacist next time they offer you the cheaper generic – “How much cheaper?” – the answer will be small – last time it was $1.90 for me – then ask – “how much more do you make in profit than the branded?” – and watch them run. The truth is the pharmacists were getting 30-50% off the price than the comparable branded product. So if the branded was $20 the generic was say $10 – and sold at a couple of bucks lower so an extra $8 would be available – so the incentive is to save money for the client – bah humbug – more profit to the pharmacy.
Also ask how is it that a 25 year old pharmacist can buy a $4 million pharmacy with no assets and minimal income? Happens dozens of times a year in this industry – I pity the poor GPs who are scrutinised to buggery, yet pharmacy has an amazingly powerful voice in the Pharmacy Guild to protect and lobby for it. Worth every penny of subscriptions it receives.