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.
- 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.