Discount medicines

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01 .Discount prices, good service

pharmacies

A CHOICE member survey suggests consumers’ shopping habits are changing with the rise of discount chemists. Good advice, as well as lower prices, was the overwhelming verdict on this growing sector of the market. 

Before you purchase any prescription, however, it's a good idea to check the Pharmaceutical Benefits Scheme website, where you’ll find the recommended retail price. Some pharmacies will charge below this and others above, as prescription medicines are highly subsidised by the government. Our feature on generic drugs also illustrates some of the dramatic savings you can make simply by choosing the generic equivalent of common medicines.

Traditional vs. discount pharmacies

In a CHOICE online survey of 900 members, we found 72% still buy their medications from traditional pharmacies, suggesting professional advice and a healthy relationship with the consumer are key factors in their decision – especially when they’re taking several different types of medication. They also cite the rapport they build up over time with the pharmacist who knows their medical history.

However, even though only 23% purchased their medications from a discount pharmacy – almost 90% of whom said it was for lower prices – 70% reported they were satisfied with the professional advice they received at discount pharmacies. “The price difference between discount and regular chemists is amazing,” says CHOICE member Ken. “I save up to 40%, or about $12, on a script. The only reason I don’t use them more often is they’re too far away.”

How can discount pharmacies charge differently?

About 30% of a traditional pharmacy’s trade consists of general retail and non-prescription medicines such as Panadol. The rest of the 70% is dispensing prescription medicines. Discount pharmacies derive more revenue from retail and non-prescription products – a 50/50 ratio compared with 30/70 for traditional pharmacies – which is partly why they can sell your medications at lower prices. Discount pharmacies can pass the savings on to you while still making a profit, because generic manufacturers and their wholesalers offer better trading terms and substantial discounts to pharmacies for bulk purchases.

Discount pharmacies choose to operate at lower margins. They’re often not in shopping malls with very high rents, and to further reduce their overheads, they also tend to employ fewer pharmacists (or pharmacists who’ve recently graduated), which is why they’re typically known for their skeletal staffing. The rise of discount pharmacies, which dispense discounted scripts and sell a range of non-prescription medications, vitamins, toiletries and beauty products at discounted prices, has encouraged traditional pharmacies to put more emphasis on retail, as well as volume-selling.
 

A balancing act

These pressures blurs the lines - mainly around price and service - between traditional and discount pharmacies. “Many main street pharmacies have changed their name to include the word ‘discount’, but charge the full list price,” says CHOICE member David. Because their revenue from dispensing PBS-listed medicines is falling, traditional pharmacies are also increasing their range of non-prescription medications as well as offering discounted toiletries. There are also traditional/discount pharmacy hybrids such as the NSW-based chain Pharmacy4Less, whose mission statement is “more care, less cost”. 

The Pharmacies in Australia report predicts that in order to combat the various revenue pressures, more traditional pharmacies “may increasingly seek to differentiate themselves from low-cost competitors on the basis of the professional value-added services”. “Consumers look to pharmacists as credible advisories for their health and wellness – especially those in less populated and remote areas – and pharmacists are increasingly the first port of call for people with health problems,” says Jeff McEvoy, National Merchandise Manager from Terry White Chemists. “We are service-driven, not profit-driven. And while we don’t believe discounting is any substitute for trusted advice and personal service, we do place particular priority on competitive pricing.”

We believe consumers are benefiting from the changing pharmacy landscape and in particular, the rise of discount pharmacies. PBS-listed medicines and consumer advice are highly-subsidised by the government so you should not assume discount prices should mean discount service. “The key message for consumers is to shop around smartly. First,by checking what the recommended consumer price is on the PBS website and then comparing the prices offered at different pharmacies. Second, by assessing the level of care and advice you receive,” says Dr Ken Harvey, adjunct senior lecturer at La Trobe University School of Public Health.

Says CHOICE member Phil Grainger: “Pharmacies are like doctors and mechanics, if you find a good one that’s helpful and offers the right price, stick with them.”

What can you save?

We compared price differences between traditional and discount pharmacies for 10 top-selling PBS-listed medications, as well as personal care items. We selected Terry White Chemists – a retail pharmacy chain with more than 150 franchises nationwide – to represent traditional pharmacies, and Chemist Warehouse – with more than 130 branches nationwide – to represent discount pharmacies. We discovered that, on average, you can save:

  • $5 on blood pressure-lowering tablets: A 30-tablet (10mg) pack of Coversyl costs $27 at Terry White Chemists, but only $22 at Chemist Warehouse.
  • $5 on antibiotics: A 20-capsule (250mg) pack of Amoxil costs $12 at Terry White Chemists, but only $6.99 at Chemist Warehouse. 
  • $4.30 on moisturisers: A 500g jar of QV cream costs $19.30 at Terry White Chemists, but only $15 at Chemist Warehouse.

How to shop smart

  • Ask your doctor if there’s a less expensive or generic brand suitable for your condition when you’re given a script.
  • Look up the medication in the Pharmaceutical Benefits Schedule online. It tells you the dispensed (PBS) price, your co-payment/permitted consumer price, the premium you pay for a brand-name drug and any generic alternatives, as well as the maximum recordable value for the PBS Safety Net. You can also find facts sheets about your medication.
  • Ensure any online pharmacy you buy from is based in Australia, staffed by registered Australian pharmacists and requires a valid script for prescription medicines. Check also that it is accredited with the Pharmacy Guild of Australia’s Quality Care Pharmacy Program.The TGA has some valuable information about buying medicines online or from overseas.
  • Make sure your medications are recorded at the pharmacy on a Prescription Record Form (PRF) if you or your family need a lot of medicines, as the PBS Safety Net helps with the cost of your medicines. 
 
 

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Pharmacy price comparison
Drug nameAtorvastatin calciumEsomeprazole magnesium trihydratePerindophilParacetamolMetformin hydrochlorideFluticasone propionate with Salmeterol XinafoateVenlafaxine hydrochlorideAmoxycillinCodeine phosphate with paracetamolTemazepam
Brand names
Brand name Lipitor Nexium Coversyl Panamax Diabex Seretide Efexor-XR Amoxil Panadeine Forte Normison
Function Lower cholesterol Gastric reflux and intestinal ulcers Lower blood pressure Pain relief, reduce fever Lower blood glucose levels Breathing difficulties/ asthma Antidepressant Antibiotic Relief of moderate to severe pain Insomnia
Pack size/ Form 30 tablets 30 tablets 30 Tablets 100 tablets 100 tablets Accuhaler 28 capsules 20 capsules Tablets 25 tablets
Strength (mg) All strengths All strengths 5 mg 500mg 500mg 1 37.5mg 250mg 100 tabs 10mg
Terry White Chemists Prices ($) 33.30 33.30 20.80 1.99 17.55 33.30 26.95 12.00 27.50 9.95
Roy Young Chemists Prices ($) 33.30 33.30 19.25 1.55 15.95 33.30 28.60 10.40 17.95 9.95
Chemist Warehouse Discount Chemists 33.30 33.30 15.50 3.80 10.50 33.30 23.99 6.99 17.99 6.99
Generic brands
Pack size/ Form NIL NIL 30 tablets 100 tablets 100 tablets NIL NIL 20 capsules 20 tablets 25 tablets
Terry White (TW) Chemists Prices ($) NIL NIL

Indopril (8mg)

18.95

TW paracetamol

1.79

Metformin (500mg)

12.95

NIL NIL

TW Amoxycillin (250mg)

9.45

APO-Codeine phosphate with paracetamol

7.45

APO-Temazepam (10 mg)

7.95

Roy Young Chemists Prices ($) NIL NIL

Indopril (8mg)

24.20

na.

Formet (500mg)

14.15

NIL NIL

Cilamox (250mg)

9.60

Codalgin Forte

9.15

Temtabs (10 mg)

8.75

Chemist Warehouse Discount Chemists NIL NIL

Perindo (8mg)

14.50

na.

Diaformin (500mg)

6.99

NIL NIL

Alphamox (250mg)

6.50

Codalgin Forte

6.75

Temaze (10 mg)

6.50

TABLE NOTES Prices accurate as at April 30, 2010. NIL means that there are no generics available for this drug. na means the pharmacy did not have a generic brand available.

 

The price you pay for a prescription medicine depends on many factors, including:

  • Whether the medicine is subsidised under the Pharmaceutical Benefits Scheme and if so, on price negotiations between the government, drug companies and the Pharmacy Guild; 
  • Your status as a patient (general, concessional or repatriation);
  • Whether a brand price premium, therapeutic group premium or a special patient contribution applies, and your safety net status.

Under the PBS, drug manufacturers negotiate the price they can charge for their products with the government. This is the “amount paid by the government” found on the PBS website. If the price of the medication is greater than the cost of the patient co-payment (currently capped at $33.30 for general patients or $5.40 for concessional and repatriation patients), the government pays the difference to the pharmacy.

For example, for 30 tablets of Lipitor (40mg), a cholesterol-lowering drug with a dispensed price of $79.05, the pharmacy receives $45.75 ($79.05 – $33.30) from the government. For concession consumers, the pharmacy receives $73.65 ($79.05 minus $5.40). If the price of the medication is less than your co-payment, you pay the full cost of the medicine. In this situation, the dispensing pharmacist can include additional fees and safety net recording. This accounts for the “price to consumer” found on the PBS website. The recommended price to consumer for the branded diabetic medication Diabex (500mg, 100 tablets), for example, is $19.76 on the PBS website. However, some pharmacies will charge below the recommended price – you’ll pay $17.55 for Diabex from Terry White Chemists and $10.55 from Chemist Warehouse. But other pharmacies may add in a number of discretionary pharmacy charges – beyond the recommended price – taking the cost of your medication closer to the capped co-payments.

To save on your medications, ask your doctor or pharmacist for a generic equivalent of brand name drugs suitable for your condition. Once a product is off patent, the government only subsidises the price of the lowest cost generic alternative. The original brand manufacturer can set the price they think the market will bear. The difference is a “brand or therapeutic group premium” that the patient must pay (and does not contribute to the PBS Safety Net). Unless your doctor has specifically indicated otherwise on the prescription, a pharmacist can dispense another brand of the same medicine at your request.

This way, you can avoid paying a premium. In the case of Diabex, you can instead opt for the generic brand, Diaformin (500mg, 100 tablets), which contains the same active ingredient but only costs $7 at Chemist Warehouse (see our Pharmacy price comparison table).

Dangers of buying online

While it can be tempting to save money by purchasing medicines online, especially from overseas, the TGA warns consumers they could be breaking the law, wasting their money or risking their health.

This is because they have no regulatory powers over international websites, and consumers run the risk of buying fake (counterfeit) drugs, drugs subject to poor quality control so they're too strong or too weak, drugs that contain dangerous or undisclosed ingredients (which could be an issue if you have allergies to these ingredients) or contaminants, or have passed their use-by date.

For more information, see Buying medicines and medical devices over the internet.

 

 

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