Community pharmacy delivers consumer benefit

Date: 31 March 2015

The Pharmacy Guild of Australia rejects the Competition Policy Review’s recommendations to deregulate pharmacies.

The current model of community pharmacy serves the nation extremely well – providing a high-quality essential health service for consumers and value for money for taxpayers.

The Federal Government has made its position clear on this issue both before and since the last election - expressly supporting the current pharmacy ownership model and the location rules.

The reason the current pharmacy model enjoys strong bipartisan political support is that it works well for patients and taxpayers, and enjoys continuing very high levels of public support.

It is also underpinned by a multi-billion dollar capital investment in local pharmacies around Australia by pharmacists who have put their livelihoods in these small businesses.

The location rules ensure that health care consumers have timely and equitable access to Pharmaceutical Benefits Scheme (PBS) medicines regardless of where they live, rather than having pharmacies clustered around affluent suburbs. 

The ownership rules ensure that local pharmacies are owned by registered pharmacists, who are health care professionals first and foremost, frequently putting their patients before profits.

The alternatives proposed by the Panel to ensure equitable access to pharmacy services in regional areas are untested, not backed up by any evidence, and almost certainly impractical to implement.

It is disappointing the competition panel did not recognise the very strong evidence the Guild has provided to demonstrate the benefits of the tried, tested and trusted pharmacy model.

The three-pronged analysis in the Guild’s comprehensive submission to the review clearly demonstrated that pharmacies are delivering high levels of access, choice, competition, equity and quality for consumers.

Rather than relying on rhetorical assertions about the community pharmacy model, the Guild engaged a number of leading independent consultants to undertake three streams of new research and analysis:

  • A ‘geospatial analysis’ of pharmacy location in Australia, relative to other vital services such as supermarkets, banking and medical centres
  • A qualitative survey of consumer preferences for community pharmacy relative to alternative models of service delivery, and
  • A cost benefit analysis of the value that consumers place on the services provided by pharmacies

These empirical analyses demonstrated that, far from limiting access and choice, the community pharmacy model provides near universal access, high quality service and choice for consumers.

The analysis found that pharmacies are in almost every case more accessible than the other three services studied (supermarkets, banking and medical centres).

For example, 87 per cent of Australians live within 2.5km of at least one pharmacy. This level of access to pharmacies is higher than for supermarkets, banks and medical centres in both capital cities and in regional areas.  It is also provided more efficiently.

The results of the consumer survey conducted for the submission included:

  • 89 per cent of consumers trust their local pharmacist either very highly or completely
  • 64 per cent of consumers support the principle that health professionals should own the business they work in
  • Community pharmacies have a clear advantage over supermarkets in terms of trust and quality of service.

The cost benefit analysis demonstrated that there would be a massive loss in consumer benefits in the vicinity of $700m a year should the pharmacy sector be deregulated.

The submission also showed that the ownership rules bring substantial benefits.  By ensuring that pharmacy ownership is widely spread, the major supermarket chains are prevented from securing the high degree of market dominance they have obtained in other areas, such as grocery retailing.

Our submission provided ample evidence that the current framework yields significant public benefits in terms of efficiency and equity.

The Executive Director of the Guild, David Quilty, said: “It is regrettable the Competition Policy Review Panel has apparently put ideology before the strong empirical evidence demonstrating that the current community pharmacy model is clearly superior to the deregulated alternatives.

“Australia’s 5450 community pharmacies, currently struggling under the pressures of price disclosure, need certainty and stability – not a constant push to abolish a system that’s working,” he said.

There is no evidence that a deregulated alternative model would deliver superior outcomes for patients or taxpayers.  On the contrary, all the evidence (including from overseas) indicates that the alternative would likely result in worse outcomes both for consumers and taxpayers, and carry significant risk.  

It is important that this ideologically driven view be put to bed once and for all. Pharmacy owners, their staff and patients need certainty so high quality services can be maintained.


Media inquiries: Greg Turnbull 0412 910261





Contact: Nikki Watson

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