How the Pharmacy Guild gouges Australians

By Leith van Onselen

You would be hard pressed to find a bigger racket than Australian pharmacies.

How many any other industries in Australia have had laws implemented that ban new entrants from opening within 1.5 kilometers of an existing business?

How many other industries allow only registered professionals in the field to own and operate a business?

And how many other industries get to entrench a cartel in a bilateral agreement with the Government every five years?

The release in 2015 of the Harper Review into competition policy recommended that the Government deregulate pharmacy ownership, by dumping pharmacy location and ownership rules, noting that “such restrictions limit the ability of consumers to choose where to obtain pharmacy products and services, and the ability of providers to meet consumers’ preferences”.

Like the Harper review, the Productivity Commission has for more than a decade pushed for changes to pharmacy ownership rules to enable pharmaceutical products to be sold in supermarkets (among other places), and has described the current restricted arrangements as adding “to health care costs for little apparent benefit”.

Similarly, the 2014 Commission of Audit recommended the pharmacy sector be opened up to competition through the deregulation of location and ownership rules.

On each occasion, the rent-seeking Pharmacy Guild hit back hard, claiming that deregulation would give supermarkets the power to compete with local pharmacies, driving independent operators out of business and putting health care second to profit.

Rather than trusting the advice of its various committees and institutions, the Coalition Government chose to side with the pharmacy lobby, deferring the liberalisation of pharmacy ownership rules into the never-never in its response to the Harper Review.

In April, the Coalition caved-in yet again to the Pharmacy Guild, shelving plans for two-month scripts after a strong pharmacist backlash.

With this sordid background in mind, The ABC has today penned an article claiming “the Pharmacy Guild is the most powerful lobby group you’ve never heard of”:

It’s been called the most influential lobby group in Australia, and some believe it has the power to bring down a government if it really flexed its muscle…

It has achieved restrictions and laws that effectively shield its members from competition — it’s why we don’t have pharmacies in our supermarkets, and why you never see two pharmacies very close together.

“They’ve been extraordinarily effective in influencing government policy funding and regulatory decisions over a long period of time,” says Jennifer Doggett, chair of the Australian Health Care Reform Alliance.

“They’re probably regarded as the most influential force in the health system.

“They have … been able to maintain a funding and regulatory regime which privileges and protects them from competition in a way no other sector has been able to achieve”…

“Collectively we’re paying about half-a-billion dollars a year more than we should for prescription medicines,” she says, citing research by the Grattan Institute

If the Coalition was ever fair dinkum about ending the age of entitlement, it would have prioritised pharmacy reform, and in the process saved consumers and taxpayers significant money.

Instead, industry rent-seekers like the Pharmacy Guild continue to pull the strings of our government.

[email protected]

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

Comments are hidden for Membership Subscribers only.