The Pharmacy Guild – sometimes dubbed the most powerful lobby group in Canberra – is threatening an intensive lobbying campaign against the Abbott government if cabinet agrees on Thursday to change what Australians are required to pay for medicines.
The changes involve relatively small budget savings for the federal government – at most $400m over five years and probably less – but would open the door to chemists competing with one another because they would be allowed to offer $1 discounts on the amount they are required to charge for scripts.
While the savings will be included in the budget, the changes are part of the closed-door negotiations for a new five-year agreement between the government and the Pharmacy Guild to replace the existing $15bn deal.
And if the pharmacists’ refuse to sign that deal, because of the dispute over the voluntary $1 discount, the government is threatening to remove the chemists’ prized “location” rules which prevent new chemists from opening within 1.5km from an existing chemist shop. And in a second counter-threat, the government says it would simply “roll over” the existing agreement in the absence of a new deal, which would disadvantage chemists’ far more.
The spat over the $1 discount – which would allow chemists to voluntarily lower the co-payment charged to concession holders from $6.10 to $5.10 and general patients from $37.70 to $36.70 – is a tiny part of the overall savings the government is planning to make from pharmaceuticals. Sources confirmed there would be a net saving of around $3bn – largely from reducing the amount paid to big drug companies towards the end of the time that a drug is under patent.
But the $1 discount fight is likely to cause the government most pain, with the guild planning an advertising campaign and an in-store campaign in which chemists effectively lobby their customers.
The guild argues that while patients might pay $1 less per script, the cost of the discount would be borne by the chemists, and the government would save money because it would take patients longer to reach the “safety net” after which they receive their scripts for free.
It also argues the change would undermine the principle that all Australians pay the same for medicines because chemists in rural areas where there are no competing stores would not face the same pressure to offer the discount.
The health minister, Sussan Ley, said: “Every year we see taxpayers subsidising billions of dollars of new medicines for patients and that amount continues to grow with nearly $3bn worth of new drugs currently before government.”
“The Pharmaceutical Benefits Scheme exists to ensure patients have affordable access to medicines and we all have a duty – from government to pharmacists to big drug companies – to ensure consumers remain our number one focus throughout this. I remain resolute in delivering a better deal for patients one way or another.”
The Australian audit office raised strong concerns about the negotiation of the last five-year pharmacy agreement and consumer groups have been pressing for more competition in the industry.
