This is part two of Inq’s investigation into the influence of the Pharmacy Guild of Australia. Read part one here.
Of all the battles the Pharmacy Guild of Australia fights, none is greater than its negotiations over the Community Pharmacy Agreement.
The agreement is negotiated every five years, and is critical to the powerful lobby group’s success. It sets out how much pharmacies — whose owners are represented by the guild — are paid per prescription.
Under the current agreement, pharmacies are guaranteed:
- A dispensing fee of $7.39 for every standard script
- An “AHI fee” of at least $4.09 to cover administration, handling and infrastructure
- An “allowable” extra charge of $4.60 which is discretionary and subject to a price limit
- An extra fee of $3.11 for a dangerous drug.
These guaranteed payments increase on July 1 every year, in line with Consumer Price Index increases. These and other rules, such as a location restriction on new pharmacies, act as the revenue stream — rivers of gold — for the owners of Australia’s more than 5000 community pharmacies.
A new agreement is due to be signed in July, this time with input from the Pharmaceutical Society of Australia which represents pharmacists.
Last year guild president George Tambassis declared war on the federal government when the government floated allowing consumers to pick up two months’ supply of a prescription drug (for chronic diseases such as blood pressure and high cholesterol) per visit to the pharmacy.
Tambassis argued the move would have a “catastrophic effect” on community pharmacies, and took out full-page newspaper ads warning the government to back down.
The government relented, and it was back to business as usual.
It is victories like these that perhaps justify Tambassis’ annual salary of $387,931 — payment that puts him in the very top band of union and employer group salaries in Australia.
The Grattan Institute’s specialist health researcher Stephen Duckett has been a long-term critic of government-backed protections, arguing that pharmacy owners were “lobbying in their own interest in direct opposition to the public interest”.
His criticisms are echoed in several government efficiency inquiries and audit reports which have recommended increasing competition or cutting down on prescription fees.
The guild has a long-term policy of making strategic political donations at federal and state level.
In 2019 it donated $773,800 to political parties, significantly higher than in previous years. More than $590,000 went to the Labor Party, likely in the expectation of a Bill Shorten victory.
But who is the guild really representing?
Professional Pharmacists Australia president Geoff March told Inq, “the thing that’s always annoyed me is that they claim to speak for the profession” — even though the guild is in reality an employer body representing the business interests of pharmacy owners.
March cites a 2017 Fair Work Commission review of penalty rates when the guild had, in effect, asked for rates for pharmacists to be cut — a move which had led to a sense of betrayal among many in the profession.
The guild’s long-term public spokesperson Greg Turnbull — a Canberra insider who worked as media adviser to prime minister Paul Keating and former opposition leader Kim Beazley — told Inq that “roughly 60% to 70% of pharmacies are in one form of banner group or buying group, as opposed to being fully independent”.
Inq’s investigation has revealed that one of the biggest beneficiaries of the guild’s lobbying is not a battling Australian pharmacist at all.
Rather it is New Zealand-based health and pet care conglomerate EBOS Health Care, which last year reported a turnover of more than $7 billion and boasts more than 3,600 employees in 57 locations across Australasia.
In 2018 EBOS became the owner of several well-known pharmacy brands — including YouSave Chemist, Max Value Pharmacy and Cincotta Discount Chemist — when it acquired NSW-based Ventura Health which owned 50 pharmacies.
In the same year EBOS completed its acquisition of the Terry White Chemmart chain, bringing another 500 community pharmacies into the EBOS fold.
Terry White — a former leader of the Queensland Liberal party and a qualified pharmacist — is himself a former guild president. And until its takeover in 2018, the Terry White group included as a director yet another former national president of the guild, Kos Sclavos.
At the same time as it acquired the Terry White group, EBOS struck a strategic deal with the giant Chemist Warehouse chain, an apparent competitor, with EBOS becoming the exclusive distributor of pharmaceutical products to more than 400 Chemist Warehouse and My Chemist stores in Australia.
Inq is not suggesting the guild has acted solely as a lobbyist for the interests of Terry White or the NZ-based EBOS group, but it is clear that what is good for the guild is also good for large corporate players who have benefited from restrictions on competition, such as the ban on any new competitor within a set radius of an existing store.
Turnbull defended the location rules, telling Inq: “The purpose of the location rules is to ensure a viable network of pharmacies so that subsidised PBS medicines can be available for Australians wherever they live. The policy objective is to ensure an efficient network, and that there is a pharmacy where people need one — it is agnostic on the size, shape or colour scheme of the pharmacy.”
Turnbull did not dispute that a wealthy corporate player may well be an ultimate beneficiary of these rules.
Tomorrow: the deputy prime minister, the president and the very large grant…