Supermarkets sure to move into pharmacy with recommended changes in competition law

Posted by AFN Staff Writers on 29th September 2014
Supermarkets sure to move into pharmacy with recommended changes in competition law
Supermarkets sure to move into pharmacy with recommended changes in competition law

With the recently-released Harper Competition Review Draft Report recommending that current recommendations on ownership and location of pharmacies is ‘unnecessary’, some industry commentators have suggested the debate about Australia’s major supermarket groups moving into pharmacy could be about to reignite.

The Harper Competition Review Draft Report is a comprehensive review of Australia’s competition laws and policies. It was prepared by a Panel Chaired by Professor Ian Harper, and also included Sue McCluskey, Michael O’Brien SC, and Peter Anderson. The report builds on the important work of past initiatives, including The Hilmer Review and The Dawson Review.

The Panel was tasked with examining whether Australia’s competition policies, laws and institutions remained ‘fit for the purpose’, especially in light of the changing circumstances of the Australian economy that are expected to unfold over the next decade or more.

Pharmacy restrictions ‘unnecessary’

The Panel said it did not consider that current restrictions on ownership and location of pharmacies were “necessary to ensure the quality of advice and care provided to patients”.

It said such restrictions limited the ability of consumers to choose where to obtain pharmacy products and services, and the ability of providers to meet consumers’ preferences.

The Panel said it considered that the pharmacy ownership and location rules should be removed in the long term interests of consumers and should be replaced with regulations to ensure access and quality of advice on pharmaceuticals that do not unduly restrict competition.

Negotiations on the next Community Pharmacy Agreement offer an opportunity for the Australian Government to remove the location rules, with appropriate transitional arrangements, according to the Panel.

Draft recommendations bad for community pharmacy and patients, Pharmacy Guild

The Pharmacy Guild of Australia (PGA) has rejected the Competition Policy Review’s draft recommendations that regulations governing the ownership and location of pharmacies be removed.

The Federal Government has made its position clear on this issue both before and since the election – expressly supporting the current pharmacy ownership model and the Location Rules, according to the PGA.

It said that the current model of community pharmacy served Australian health care consumers “extremely well” and that this assessment had been “reaffirmed repeatedly” in published public opinion polls.

“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 and replace it with an economic theory,” said David Quilty, Executive Director of the PGA.

The PGA said regulation around pharmacy including the Location Rules, ensured that healthcare consumers can get “timely and equitable access” to Pharmaceutical Benefits Scheme medicines wherever they live in Australia. It said the regulation had “a clear public benefit”.

The PGA said it would be making a formal submission to the Competition Review in response to the Draft Report.

Supermarket pharmacy debate

Earlier in 2014, supermarket giant Woolworths came under fire from healthcare groups following an advertisement on job website Seek for student pharmacists.

Woolworths released a statement which said that the advertisements were part of its trial of a service performed by qualified nurses, where supermarket customers in nine stores were offered cholesterol and blood pressure checks. The trial began in October 2013.

“This is a free service that has received an overwhelmingly positive response from customers,” Woolworths said at the time. “In a survey of over 1,000 people who have used the service more than 90 per cent found it useful and valuable,” it said.

Woolworths said it respected that there were “clear rules” for these services, and that the trial would be “extensively reviewed” before a decision was made to roll the services out to more stores.

George Tambassis, PGA’s National President said that allowing Coles and Woolworths to take on pharmacy would not increase competition.

“There is no case study that I am aware of where supermarket entry has resulted in a net increase in players in a market in any industry; meat, poultry, general grocery, health foods, tobacco, liquor, petrol, insurance, you name it,” Mr Tambassis wrote in an opinion piece. “Giving supermarkets the right to enter the market will ultimately reduce the number of players in the market and therefore reduce competition,” he said.

“And prices won’t come down in the short term because most PBS prices are fixed by Government – and not in the long term either, because more market power for Coles and Woolworths ultimately means less competition and higher prices,” Mr Tambassis said.