Threat to Pharmacies !

The Health Minister is negotiating a new five year agreement with the powerful Pharmacy Guild of Australia.  This is expected to be concluded by December and will come into effect in the middle of 2020.   One of the questions being debated is whether there are too many chemist shops serving the public and  whether health costs would improve if the numbers were reduced ?

That argument revolves around discounting.   In recent years the pharmaceutical industry has been challenged by the emergence of bulk supply warehouses offering cut prices to move stock quickly.  They are prolific advertisers and one of the incentives offered it a one dollar reduction on the price they charge for pensioner scripts under the PBS.  That price is set at $6.50 and all pharmacies are entitled to offer the discount, but few do.

The Pharmacy Guild represents the 5,700 local pharmacies across Australia and it is usual to find several  competing for business in each shopping centre.  Many have expanded their range of merchandise widely and there is some criticism that many stock very doubtful alternative health products with higher profit margins.   We are constantly seeing folk medicines and herbal supplements taking up additional shelf space.

Pharmacies are under pressure from supermarkets who increasingly offer non prescription medication at discounted prices.  It is the friendly pharmacist who often is the sole provider of medical advice to the vast number of people who never see a doctor, either because of cost or the lack of available services in their area.  Sometimes it is whole families that rely on the local pharmacy for medical advice and this is a service that has high value.

We would be well advised to remember what happened to the electrical goods industry when the discount chain phenomenon rolled into Australia.  Every suburb had electrical shops selling refrigerators, washing machines and the full electrical assortment and customers were enticed away by the Norman Ross chain offering almost unbelievable discount prices.  They and their competitors formed a sales group that forced those small electrical shops to close their doors and today we no longer shop locally for those big ticket items.   It would be very easy to see pharmaceuticals contract to a similar bevy of discounters in close proximity to one another.

Unfortunately the outcome of this battle between the existing pharmacies and the discounters will be decided by public support and not by government diktat.  It seems inevitable that some weaker pharmacies may close if trade ceases to deliver a living to their proprietors but we now live in the discounting age and the discounters will attract those prepared to suffer a little inconvenience in exchange for a price saving.

That is a conundrum best left to settle by natural attrition.   The sheer volume who rely on pharmacies for medical advice are likely to preserve the status quo  !