Harmacy: The Political Economy of Community Pharmacy in Australia

PHARMACY INDUSTRY IS ANTICOMPETITIVE AND KEEPING PRICES UP

The community pharmacy industry is dressing up anticompetitive behaviour as a public health measure.

In a new report, Harmacy: The Political Economy of Community Pharmacy in Australia, released by the Centre for Independent Studies today, David Gadiel exposes the pharmacy sector as one of Australia’s most protected industries.

Few countries have such complex and restrictive pharmaceutical scheduling laws as Australia. This has inhibited competition and increased the costs that Australian consumers pay for many non-prescription pharmaceuticals sold only by pharmacies.  

‘Regulation has created barriers to entry and imposed strict ownership criteria on pharmacies. This anticompetitive regime means that pharmacies are not subject to competition from alternative points of sale, like supermarkets and convenience stores,’ says Gadiel.

‘While there may be benefits in regulating pharmacy quality standards, there are none for restricting entry and ownership in the industry.’

‘One of the main ways in which pharmacy has been insulated from competition is through agreements between the federal government and the Pharmacy Guild of Australia, which assure commercial protection and public funding. Despite numerous government reviews, political lobbying has allowed community pharmacy to resist change,’ says Gadiel.  

 This report says:

• The rigid pharmacy retail model of resident owner-manager pharmacists has contributed to an artificial scarcity of pharmacists, caused by the protection and maintenance of specific roles for pharmacists that could easily be delegated to others.
• The community pharmacy network exerts a quasi-monopoly power over prices it charges consumers for non-prescription pharmaceuticals regulated for sale as ‘pharmacist only’ and ‘pharmacy only.’
• In the UK, prices of over-the-counter items decreased by 30% between 1991 and 2003 after supermarkets became involved in retail pharmacy.
• Criticism of pharmacy ownership restrictions and initiatives to deregulate non-prescription pharmaceuticals in the interests of competition have been rejected by the Guild, under the guise of unproven claims of ‘concerns for public safety.’

The report is available at https://www.cis.org.au/policy_monographs/pm89.pdf

David Gadiel is an independent economist who has worked extensively on the health system.
He is available for comment.

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