One way to spot good policy
The federal government wants to allow doctors to issue people 60-day prescriptions for certain common medicines, instead of the current 30-day limit. If you take medicine regularly, then over the course of two months you’ll buy the same amount of meds, but with one fewer visit to your doctor and pharmacy. That can only be a good thing for patients – fewer unnecessary, annoying and potentially costly errands to run. But not so for the Pharmacy Guild of Australia:
“We all want the same thing in terms of cheaper medicines for Australians but this policy from the federal government with 60-day dispensing will represent a $4.5 billion cut to community pharmacy funding over four years
We’re asking the government to pause, consult more with community pharmacies and the aged care sector and make sure we get this right.”
Australia’s pharmacies are some of the most protected businesses in the country. The government literally bans potential competitors from opening too close to existing pharmacies. It also subsidises them with “dispensing and handling fees” to the tune of $1.67 billion annually (2021-22), a figure that was boosted 7% this year – “nearly double the 3.6 per cent indexation of Medicare rebates”.
To use standard economic jargon, Australia’s pharmacies are textbook rent seekers:
“The idea is simple but powerful. People are said to seek rents when they try to obtain benefits for themselves through the political arena. They typically do so by getting a subsidy for a good they produce or for being in a particular class of people, by getting a tariff on a good they produce, or by getting a special regulation that hampers their competitors.”
When the body representing a group of rent seekers responds vociferously to a proposed policy that will lower those rents, it’s a good sign you’ve got a winner. As Linda Bowles once remarked:
“The task of weaning various people and groups from the national nipple will not be easy. The sound of whines, bawls, screams and invective will fill the air as the agony of withdrawal pangs finds voice.”
It’s high time The Pharmacy Guild and its members were weaned off the taxpayer’s teat.