Pharmacy pricing

The cost of medicines is being artificially inflated by lack of competition and practices that encourage price uniformity.
 
Learn more
 
 
 
 
 
  • Updated:6 Jul 2005
 

01.Pharmacy pricing

Spoon filled with pills

The issue

Pharmacists are inflating the price of some medicines on the Pharmaceutical Benefits Scheme (PBS) by adding various fees which are then passed on to the consumer.

CHOICE has been campaigning against pharmacy practices that encourage price uniformity between competitors and lead to higher prices for consumers. 
 

Private prescriptions

One practice of concern was the default settings in the pricing component of the software (WiniFRED) used by many pharmacists. As a result of CHOICE's campaign these settings were amended for private (non-PBS) prescriptions. The default mark-up of 75% was changed to 0% and the dispensing fee to $0.

PBS prescriptions

Where a pharmaceutical item on the PBS has a dispensed price of less than $30.70, pharmacists may charge general patients an additional fee called the Safety Net Recording Fee. This fee cannot take the cost of the prescription above $30.70, which is the maximum patient contribution for drugs listed on the PBS.

CHOICE has found that pharmacists also routinely add a ‘further additional patient charge’. This charge does not contribute towards the PBS safety net threshold. Under the Community Pharmacy Agreement between the Pharmacy Guild and the government, pharmacists are supposed to inform customers that this charge is ‘not initiated by the Australian Government'.   Pharmacists are free to discount the price of these items.

Retail pharmacy is already protected by regulations that reduce competition. These include restricting pharmacy ownership to pharmacists, limiting the number that any one pharmacist can own and restricting the location of new pharmacies so they are not too close to competitors. The Pharmacy Guild argues that these regulations are necessary to allow pharmacists to provide quality advice to consumers.

Current situation

The Australian Competition and Consumer Commission investigated the matter and concluded that the conduct of the Guild does not raise issues that the Commission should pursue. The Commission also stated that the failure to inform consumers that the further additional patient charge is not initiated by the government is a public policy matter and should be dealt with by the Health Insurance Commissiion.

What we want

  • Fair and more transparent pricing of pharmaceuticals.
  • Consumer input into Pharmacy Agreement negotiations.
  • The provision of quality pharmacy advice to consumers.

What we're doing

We wrote to the Treasurer asking for the Productivity Commission to conduct an inquiry into the regulation of prciing of prescription medicines in Australia.

More information

The pharmacy: why it can't stay a closed shop (Consuming Interest, Winter 2005) 
Protected species: the community pharmacist (Consuming Interest, Autumn 2005) 
Great letters from history (Consuming Interest, Autumn 2005) 
Dispensing advice (CHOICE, September 2004)

 
 

 

Sign up to our free
e-Newsletter

Receive FREE email updates of our latest tests, consumer news and CHOICE marketing promotions.