Assignment 2 EFB225 Toumlin PDF

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Claim The Pharmacy Guild of Australia have such influence on government funding and rules and regulations in the pharmacy industry, that Australian consumers are paying far higher prices for prescription drugs

Evidence 1. Increasing donations made to political parties 2. The price of prescription drugs in Australia is up to 4 times more expensive than the rest of the world. Australians are paying almost $500 million a year for generic prescription drugs

Counter argument and rebuttal ( )

Warrant 1. Government ultimately controls rules and regulations in pharmaceutical industry. But with the magnitude of donations made by the guild, a certain level of pressure may influence said controls

1. The Guild’s 6th agreement with the Commonwealth is set to see some improvements. (One-of 5% price reduction to F1 (single brand) medicines after 5 years.’ Backing Correlation between monetary contribution and influence The guild does not act in favour of the best interests of consumers and taxpayers

Qualifier Conditional on the fact that the government (and its’ regulation in the pharmaceutical industry) is in fact swayed by the contributions of the guild

Over the past few years, the disputed political power of the Pharmacy industry and political donations to control health policies has been a high source of controversy. This power can be fully expressed with George Tamabassis the acting president of the Pharmacy Guide describing that the guild can “veto power over any government health policy that might affect pharmacies”. Elder and Albrechtsen described that due to the influence of the Pharmacy Guild they can tamper with “securing government funding, maintaining restrictive rules and regulations in the pharmaceutical industry” (Albrechtesen 2014) causing a shift in prescribed drug price compared to other OECD countries. This issue has arisen now due to the significantly higher donations to political parties in the 2018-2019 financial year of nearly $800,000 compared to the previous year’s donation that was only around $200,000 (John Elder 2020). These donations are used to hedge bets with different political parties to influence policies from those political parties in their favour. More specifically recent donations are due to the Community Pharmacy Agreement which is renegotiated every five years and was set to expire June 2020. This agreement is worth an estimated $18.9 billion dollars to community pharmacies and controls how much money pharmacies are paid for dispensing medicines listed on the Pharmaceutical Benefits scheme. This scheme also controls the dispensing of prescriptions released which Pharmacies are again trying to control using government support. This is due to the recent talk of allowing patients to collect 2 months of prescriptions instead of just 1 benefiting individuals with chronic conditions over pharmacists. The guild countered this suggestion by saying that “it would lead to job losses and possible pharmacy closures'' thus the proposal was suspended. This instance of pharmacists controlling political policies is just an instance that shows how George Tamabassis is going to control the Pharmaceutical Benefits scheme in the favour of pharmacists. This is more relevant than ever, not only because of the impending consequences of the latest Pharmacy Community Agreement, but also due to the push of pharmacies to move into primary care of patients. Evidence of this can be seen in the allowance of pharmacists to prescribe antibiotics for urinary tract infections, a situation that would be usually be solely in the hands of one’s general practitioner. Despite the economic benefits that consumers would face, due to not having to pay for a Doctor’s appointment, it puts into question if the guild has the best interests of the health of Australian society at large because of the depth of medical knowledge that pharmacists lack in comparison to a general practitioner . Not only does the guild have the leverage to influence the government to enact these changes, but they also advise on the subsidisation of, sometimes lifesaving, prescription medication. A Grattan Institute report estimated that, on average, Australian’s are paying approximately $500 million a year too much for prescription medications and that “In the past twelve months about 8 per cent of Australian’s didn’t get, or deferred getting, prescribed drugs because they couldn’t afford them” (Duckett, 2019). If the guild is responsible for advising what medications are covered under the Pharmaceutical Benefits Scheme, then they too are responsible for the accessibility of said drugs to the everyday Australian. If almost ten percent of the population cannot afford to buy prescription drugs when they need to, it can be deduced that there are alterations that need to be made by the guild. As stated previously, the main objective of the guild is to ensure the financial stability of pharmacies across Australia. With that being said, as a result of major political donations, government actions are occurring in the name of the best interest of society as whole, but in fact are solely based on the success of pharmacies. In the 2017-18 financial year, the Pharmacy Guild of Australia were ranked as the 14th largest political donor. Of these donations, the majority went to the Labour and Liberal parties, acting as reassurance that either party in power have the interests of the guild in mind, rather than prioritising the economic standing or health of Australian society as a whole. Despite the significant political motivations evident in the guild, the latest Community Pharmacy Agreement promises some benefits to society. The 6th agreement includes a “One-off 5% price reduction to F1 (single brand) medicines after 5 years”. For those who

suffer with chromic illnesses, and therefore have extended use of prescription medications, this would be beneficial in the long term. However, this win for consumers in no doubt outweighed by the 17 cent increase in the pharmacy dispensing fee. Not only are the magnitude of political donations increasing over time, research has shown that the price of prescription medication in Australia is considerably higher than that of other, similar countries. It is approximated that, on average, prescription medication in Australia costs four times that amount than it does globally. If the Pharmacy Guild of Australia is responsible for proposing the amount of money received by pharmacies for each prescription, they too are responsible for determining the amount Australian’s pay for prescription drugs. It’s understandable that the guild’s primary focus is preserving the financial security of local pharmacists, but at what cost? A Commonwealth Fund study has estimated that Australia had an out-of-pocket prescription drug spending of $126 per capita in 2015, whereas Germany, a country similar to Australia in both GDP and healthcare structures, had an out-of-pocket prescription drug spending of $42 per capita. This indicates that Australian’s are in fact paying more than they should be for prescription medication. Furthermore, in general, Australia pays more than Britain for 19 of the 20 most commonly used prescription drugs, and in some cases by far. The price of an average dose of Atorvastatin, an cholesterol medication, is $1.28 per pill in Australia, compared to a mere 12 cents in England. These discoveries all point to the fact that Australian’s pay too much from prescription medication, assumedly at the hands of the Pharmacy Guild of Australia. Overall, the Pharmacy Guild of Australia is successful at preserving the livelihood of local pharmacists. However, with their priorities elsewhere, the guild is harmfully impacting the economic stability and overall health of the average Australian. Assuming that the Pharmacy Guild of Australia are, in fact, responsible for price of prescription medication due to their wide-reaching political influence, they are a major reason for the high prices of prescription drugs in Australia. · “Australia are found to be still paying too much for prescription drugs, claiming savings of half a billion dollars could still be found through reforming drug pricing policy” Source:https://grattan.edu.au/wpcontent/uploads/2017/03/886-Cutting-a-better-drug-deal.pdf

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Graph 1: (National Trends in Per Capita Pharmaceutical Spending,1980-2015):

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Graph 5:“The Proprotion of the total reimbursed pharmaceutical market classed as genric pharmaceuticals in Australia was lower than the OECD average (19% compared with 24% based on value; 37% compared with 49% based on volume). Based on value, the share of generic pharmaceuticals in the reimbursed pharmaceutical market was highest in Austria (48%) and based on volume was highest in the United Kingdom (85%)” Prescription medication in Australia is 4 times more expensive than the rest of the world  Prices are twices as much as the UK and 3.1 times higher than New Zealand

More than $770,000 donated by the Pharmacy Guild of Australia to political parties last year This topic relevant now, more than ever because of the “new Community Pharmacy Agreement” and the push of pharmacists to move into primary care o Qld will soon be allowing pharmacists to prescribe antibiotics for UTI’s → against doctors’ warnings of microbial resistance o The Community Pharmacy Agreement is renegotiated every 5 years and decides the amount of money pharmacies are paid “for dispensing medicines listed on the Pharmaceutical Benefits Scheme (PBS)”, and the types of services offered by pharmacies o The previous agreement was worth $18.9 billion dollars, and the upcoming agreement is set to be worth $20 billion dollars  A report from Dr Stephen Duckett at The Grattan Institute has said that Australian’s are paying $500 million a year too much for medications → generally, Australian;s are paying far more than the international price for drugs that should be far cheaper o “In the past 12 months about 8 percent of Australian’s didn’t get, or deferred getting, prescribed drugs because they couldn’t afford then” o It is not only impacting on the individuals economic standing, but also harms their health  Both the Australian Medical Association and the Royal Australian College of General Practitioners do not give political donations → because they cause conflicts of interest

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The guilds key focus is the financial stability of pharmacies → one of their main objectives is to protect pharmacists incomes o Communities are so willing to stand behind their local pharmacies to the point that in 2013 (Rudd government) when there was a move to reduce the price of prescription drugs, customers petitioned  The Pharmacy Guild was the 14th largest political donor in 2017-18 → these donations include the majority going to the Labour and LN Parties, but also $15,000 of the $220,000 going to the One Nation party o “Location laws” means individual pharmacies are protected from each other  In large urban areas, a new pharmacy cannot be opened closer than 1.5 kilometres from a existing pharmacy  The new pharmacy also has to be within 500 metres of a fulltime prescribing medical practitioner and a small supermarket, or within 400 metres of a large supermarket  “There has been a whole range of evidence to show that the benefits to consumers of being able to fill a prescription at a supermarket, where you go and doall the rest of your shopping, would far outweigh any negatives”  What is the power they have?  “So the Coalition in particular is vulnerable to a scare campaign from the Pharmacy Guild to say, ‘We don’t like this so we will tell all our customers. And we will put up posters telling our customers that the government has made a terrible decision that will hurt them.” Graph 5:“The Proprotion of the total reimbursed pharmaceutical market classed as genric pharmaceuticals in Australia was lower than the OECD average (19% compared with 24% based on value; 37% compared with 49% based on volume). The therapeutic group premium policy (PBS) has many loopholes that allow for consumers to be taken advantage of o There are recommendations to strengthen said policy to make Australian pharmaceutical prices comparable to that of germany

Supplementary Readings • John Elder (2020) “How and why the Pharmacy Guild is so good at leaning on politicians” (The New Daily, Feb 8 2020) URL: https://thenewdaily.com.au/life/wellbeing/2020/02/08/pharmacists-political-donationsaustralia/  More than $770,000 donated by the Pharmacy Guild of Australia to political parties last year  This topic relevant now, more than ever because of the “new Community Pharmacy Agreement” and the push of pharmacists to move into primary care o Qld will soon be allowing pharmacists to prescribe antibiotics for UTI’s → against doctors’ warnings of microbial resistance o The Community Pharmacy Agreement is renegotiated every 5 years and decides the amount of money pharmacies are paid “for dispensing medicines listed on the Pharmaceutical Benefits Scheme (PBS)”, and the types of services offered by pharmacies o The previous agreement was worth $18.9 billion dollars, and the upcoming agreement is set to be worth $20 billion dollars

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Guild is not made up of pharmaceutical experts but more of a financial specialist lobby group → the most powerful in Australia it is said The guild has a track record of “riding herd on emerging policies that would have benefited consumers, but eaten into member profits” The guild’s donation to political parties last financial year was significantly higher than previous years → most of which ($590,000) went to the Labour Party as a loser bet due to the most recent election President of the guild, George Tamabassis has said that the guild wanted “veto power over any government health policy that might affect pharmacies” At the same time, the guild has been advertising that “community pharmacy needs to government’s support”

This plea to the government was a response to the possibility that patients were allowed to collect 2 months of prescriptions instead of just 1 → benefiting those with chronic conditions like high cholesterol etc. o The guild has countered these suggestions by commenting that the guild was never consulted, saying that it would lead to job losses and possible pharmacy closures → thus the proposal has been suspended  A report from Dr Stephen Duckett at The Grattan Institute has said that Australian’s are paying $500 million a year too much for medications → generally, Australian;s are paying far more than the international price for drugs that should be far cheaper o “In the past 12 months about 8 percent of Australian’s didn’t get, or deferred getting, prescribed drugs because they couldn’t afford then” o It is not only impacting on the individuals economic standing, but also harms their health

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Both the Australian Medical Association and the Royal Australian College of General Practitioners do not give political donations → because they cause conflicts of interest

• Lesley Russell (2019) “What is the Pharmacy Guild of Australia and why does it wield so much power?” (The Conversation November 27, 2019) URL: https://theconversation.com/what-is-the-pharmacy-guild-of-australia-and-why-does-it-wieldso-much-power-127315  Pharmacies who distribute medication covered by the Pharmaceutical Benefits Scheme (PBS) are represented by the Pharmacy Guild of Australia  Pharmacy Guild of Australia founded in 1928 → initially as an organisation for the owners of pharmacies  The guilds key focus is the financial stability of pharmacies → one of their main objectives is to protect pharmacists incomes o This is done through various methods. An example: “Pharmacy Guild was able to coerce the government into providing A$210 million in the 2017-18 budget to community pharmacies as compensation for lower than forecast prescription volumes”  the guild has disputed the suggested changes in the location rules of clustering pharmacies (and other efforts to increase competition) → allowing them in supermarkets  The guild’s executives and members reach into every community and their political donations make them highly influential o Local pharmacies commonly garner widespread support from their communities for their causes → acting as a deterrent for any political changes to occur o Communities are so willing to stand behind their local pharmacies to the point that in 2013 (Rudd government) when there was a move to reduce the price of prescription drugs, customers petitioned  The Pharmacy Guild was the 14th largest political donor in 2017-18 → these donations include the majority going to the Labour and LN Parties, but also $15,000 of the $220,000 going to the One Nation party • Monique Ross and Richard Aedy (2019) “Why the Pharmacy Guild is the most powerful lobby group you've never heard of” (ABC News Jun 20 2019) URL: https://www.abc.net.au/news/2019-06-20/pharmacy-guild-lobby-wields-great-politicalpower/11217028  Rules that relate to who can own a pharmacy and where o Only a registered pharmacist can own a pharmacy, which locks out big companies like coles and woolworths o “Location laws” means individual pharmacies are protected from each other  In large urban areas, a new pharmacy cannot be opened closer than 1.5 kilometres from a existing pharmacy  The new pharmacy also has to be within 500 metres of a fulltime prescribing medical practitioner and a small supermarket, or within 400 metres of a large supermarket  “There has been a whole range of evidence to show that the benefits to consumers of being able to fill a prescription at a supermarket, where you go and doall the rest of your shopping, would far outweigh any negatives”  What is the power they have?

“So the Coalition in particular is vulnerable to a scare campaign from the Pharmacy Guild to say, ‘We don’t like this so we will tell all our customers. And we will put up posters telling our customers that the government has made a terrible decision that will hurt them.” Pharmacy Guild use donations to hedge their bets with different political parties so they get what they want 

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“Pharmacy Guild Donations skewed heavily toward ALP during the last financial year, electoral commission data reveals”, https://ajp.com.au/news/show-me-the-money-3/ (04/02/2020, AJP)  At times in the lead- up to 21 may federal election, there was a open conflict between the Guild and the federal Government  AEC data, published that the Guild donated $773,791 across the political spectrum during the 2018/19 Financial year. $590,811 was donated to various branches of the ALP, with the remaining $182,980 shared by the coalition parties o Largest donation during the year: $250,00 to the ALP’s Victorian Branch (29 April) with another $110,000 donated a month later (17 May), and again anoth $50,000 (14 May) o Largest donation to One Nation: $30,000 (18 July 2018) o Largest donation to One Nation: No recent donation since 2017/18 financial year • Janet Albrechtsen (2014) “Pharmacists’ Cosy Cartel Needs Dose of Reality” (16 April 2014 The Australian) 

• Greg Turnbull (2014) “Communities know the value of their pharmacies” (17 April 2014 The Australian) • Richard Stroup (n.d.) “Political Behavior” (The Library of Economics and Liberty) URL: https://www.econlib.org/library/Enc/PoliticalBehavior.html  · “Australia are found to be still paying too much for prescription drugs, claiming savings of half a billion dollars could still be found through reforming drug pricing policy” Source:https://grattan.edu.au/wpcontent/uploads/2017/03/886-Cutting-a-better-drug-deal.pdf

The competitiveness of the Australian pharmaceutical market compared to other OECD countries) · 

Graph 1: (National Trends in Per Capita Pharmaceutical Spending,1980-2015):

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Graph 2: (Retail Pharmaceutical Spending, 2015):

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Source: https://www.commonwealthfund.org/publications/issue-briefs/...