Australians have a wide choice of the Chemist shops they choose to supply their medical needs. It seems that they exist in great numbers - because they are a very profitable business. There is a very strange anomaly in the pricing structure of the drugs they sell.
Under the Pharmaceutical Benefits Subsidy scheme in place the government sets the price for each drug item by negotiation with the manufacturer. This is based on how that drug is protected by patent and the time left before that patent expires, meaning that the drug can only be manufactured and sold by the patent holder. Once established, this is the basis on which the chemist applies a dispensing margin and the end result is the retail price charged over the counter - or at which it is supplied to pensioners and others who receive the benefit of a price discount.
It seems that this anomaly concerns the pricing of what are termed "Generic "drugs ! Once the patent protection of a drug expires that exact formulae can be produced and sold by competitors under any new name they may choose to call their product. It is usual for the original manufacturer to also drop the price of the product now out of patent protection to continue to keep the sale trend going in the face of generic competition.
This anomaly is delivering a bonanza to the owners of chemist shops. As the retail and PBS prices are set in relation to the price negotiated by the government, they are free to buy the generic versions offered by the industry at greatly reduced prices - and pocket the huge savings to be made.
A recent study illustrated the difference prices applicable between the Australian and the British PBS systems. Astorvastatin - which many users would recognise as "Lipitor ", costs $ 10.50 in Australia and just $ 3.30 in the UK. Similarly, a widely used blood thinner - Clopidogral - has a price difference of $ 12,00 to $ 3.60.
The government is negotiating a new pharmacy deal to serve for a five year period and clearing up this anomaly may prune a whopping $ 15 billion off the PBS total, but of course any saving must come out of someone else's pocket - and it is estimated that the new deal will cost the average pharmacy a profit drop of $ 90,000 a year.
The chemist shop has always been a cherished and highly protected industry. They have fought long and hard to keep pharmaceuticals out of the hands of the big supermarket chains, but they have been under pressure from new industries offering discounted drugs and many of these are Internet based companies. They can not realistically expect the rorts that have seen their numbers flourish to continue unabated in this more competitive century.
Lower profits will certainly see a contraction in the number of pharmacies and there is every indication that the direct sale discounters are here to stay. It is also possible that the government may be persuaded that the plethora of grocery selling outlets and seven day operations with extended hours deserve a share of the drug business. The future filling of prescriptions is certainly under review - and it could be classified as "uncertain "!
One thing clearly emerges. All services that are under government control need to be closely monitored to determine that the conditions that apply are relevant. It seems that the anomaly between patented and generic drug prices slipped through the cracks - and cost the public purse a lot of money.
Hopefully, that is a lesson learned !
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