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September 2001 issue Pharmacy Today magazine


The government may tighten the screws on pharmacy to get its way over the national pharmacy services contract.

The government's review of pharmacy ownership could be used to lever down pharmacy payments, according to the Pharmacy Guild.

Guild president Gray Maingay says the Ministry of Health has signalled the possible option of settling a national contract at below current rates in return for supporting the guild and Pharmaceutical Society's stance on ownership.

He says there is no room to reduce dispensing fees without driving some pharmacies out of business.

However, ministry deputy director general Dr David Lambie says ownership has not been part of contract discussions and he is unaware of any plans to introduce it as a negotiating tactic.

No comment

Pharmacy Today requests for comment from the Minister of Health's office went unanswered.

One Health Ministry source suggests the Health Minister is playing the nice guy role while urging the ministry to take a tough line on pharmacy.

The guild is taking the threat seriously, sending the issue to its membership for comment.

A recent guild survey found all 653 responding pharmacies backed its executive council recommendations not to compromise the contract against a possible threat to deregulate ownership and to first secure a "safe, sustainable and fair" contract.
Guild CEO Murray Burns says while some pharmacists have concerns over patient charging, the "vast majority" are in favour of charging if the final dispensing fee proves uneconomic.

Media campaign

Should the government decide to add ownership to contract negotiations, the guild is preparing a "Blue Banner" media campaign designed to convince the public and politicians of the dangers of under-resourcing pharmacy.

During a recent burst of media interest in the contract, Gray Maingay says he was astounded reporters were unaware the co-payment is made to government, not the pharmacist.

The guild sees the main obstacles to settling the contract as the ministry's fixed $211 million budget and its "flawed" pricing model on which the dispensing fee is likely to be set.

Pricing model

The model is based on the analysis of one independent pharmacy and five Care Chemists.

Based on these calculations, the ministry claims pharmacists should be able to process 13 to 14 prescriptions per hour while the guild contends a safe and realistic figure is between 8.5 and 9.1. Care Chemist's analysis gives the number at 8.59.

The guild cites ministry offers of $4.75 (excluding GST) if the volume risk-sharing capped pool arrangement is retained and $4.50 without it. The guild's position has been that $6 is a fair and realistic cost.

The ministry's prescription processing and pricing estimates are economically unsustainable for pharmacy and potentially unsafe for patients, says Murray Burns.

Or as Gray Maingay put the public safety issue to National Radio, "the faster you go, the bigger the mess."

However, David Lambie says the ministry stands by the model and says it serves as a guide rather than a "definitive conclusion of appropriate (pharmacy) process".

The fee options are only two of several being examined, he says.
Meanwhile, negotiations are entering their sixth month, two ministry chief negotiators have quit and a date for mediation between the guild and ministry has yet to be set.

A guild counter-offer is in the pipeline but Murray Burns declined to give details.


There is still no indication from the Ministry of Health when the decision on ownership will be made. The issue is currently with the Minister of Health.

Options under consideration are:

  • Continued pharmacist ownership, with at least 75% of share ownership by pharmacists, as promoted by the guild and society.
  • A licensing system (partial deregulation) which will open ownership up to non-pharmacists.
  • A regime where a pharmacy must simply be under control and management of a pharmacist at all times (total deregulation).

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