Pharmacies - Price competition - Why is there none?

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The cup of coffee I bought earlier cost too much. Do coffee shops need deregulation?

This comment misrepresents the current situation.

There is price competition in the coffee area.

I don't pay the same price for a capuccino in every shop.

Every shop where I buy my eye drops charges me 4.56 euros for the product.

Try Economics 101. Which situation is the more open to overcharging?

There's a cream I sometimes buy which is 27-28 euros in ALL chemists. In Spain it's 10.40 euros. Please pharmacy experts tell me where the 17 euros is going?

In the car industry price cartels bring garda investigation.

In pharmacies the poor consumer just puts up with the same awful price due to a scheme which doesn't allow for price competition.

The market is being skewed by this. Look at Rathmines. I would wager that there are large numbers of pharmacies because they can all make a high state guaranteed profit on prescription and OTC medicines.

No wonder there has been the sudden explosion in shops in recent years.

The state can no longer afford to provide sweetheart deals to special interest groups like the pharmacy sector.

And yes it has become less regulated in recent years but I'm afraid that pharmacy interests in Ireland were dragged kicking and screaming to that point.

We can no longer put up with a competitive export sector being held back by under-competitive and over profitable services in the domestic sector.

Gearoid
 
There's a cream I sometimes buy which is 27-28 euros in ALL chemists. In Spain it's 10.40 euros. Please pharmacy experts tell me where the 17 euros is going?

If the price is €27-28, you can be guaranteed that the irish pharmacies are paying more than €10.40 for the product from the wholesalers.

The market is being skewed by this. Look at Rathmines. I would wager that there are large numbers of pharmacies because they can all make a high state guaranteed profit on prescription and OTC medicines.

There is no state guaranteed profit on OTC medicine.
Medicines here, OTC and prescription, are more expensive partly due to the high cost of licencing a medicine with the Irish Medicines Board. The price of the OTC weightloss drug Alli highlights this. It was given a pan-european licence instead of needing local licences in each member state and as a result, irish pharmacies are selling it for the same price, and in some cases slightly cheaper than pharmacies in britain.
 
Thanks phatfrog,

Now we are getting down to some interesting information. I don't claim to be especially knowledgeable, just a particularly sinical consumer given the past antics of your professional organisations e.g limiting numbers of students, preventing foreign pharmacists entering market etc. etc..

I as a consumer want to know who is taking such a big slice of the cake.

I have seen numerous instances where Greek and Italian prices are actually on the medicine.

So, is that someone actually avoiding the local wholesaler? You were very limited on the actual details.

Here's a prescription (30g Lamisil cream). Who is making the 17 euros, you or the wholesaler?

Also, if there's no guaranteed price why am I paying the same amount in all chemists?

Also if no one is expecting you all to charge the same then why should I pay the same everywhere? Surely one of your number would put things on special offer?

No one has yet answered that question from the pharmacists among us, and no one has put up an academic or moral argument for justifying it.

All I get is grim forebodings of pharmacists on the bread line. To put it mildly I couldn't give a fiddlers given your past history.

In my industry (IT) you had to be particularly bright to make a million, given you had competition from India/Israel/UK/US. In times past you just had to open a pharmacy in a new estate to do the same given the then restrictions to practice based on pharmacy special interest pleading.

I would say at this stage you really need to try EXTRA HARD to justify the IPU statements over the last few days. I and many others just think it's special pleading (bleeting more so) from an already cosseted local interest group.

Regds,]
Gearoid
 
http://www.ncpe.ie/

Here is an agreement between the HSE and the manufacturers:

[broken link removed]


A HSE presentation on reducing drug costs:

[broken link removed]

I have just read the APMI_Agreement_Amended_2009_.pdf document.

This would indicate that the price for a specific medicine should be amended to the lowest wholesale price in any one of a number of nominated countries given certain conditions in the agreement between the APMI and the HSE. Spain is one of the nominated countries.

I am picking one pharmaceutical product. It costs 10.40 eu in Spain and 27 euros in Ireland.

Based on the agreement and my limited legal knowledge the HSE should be sourcing it at the price of the cheapest wholesaler price given in the list of countries including Spain.

To make a profit any pharmacist in Spain must be charging a mark-up. They charge 10 euros 40 cent. Irish price is 27 euros plus. (Lamisil 30g).

Based on the HSE/IPHA agreement who isn't doing their job?

How much is the GMS paying in these straightened times?

Someone is making an abnormally large profit. I want to know who it is!
 
Try the members of IPHA. They got a sweetheart deal with the HSE last year, but the HSE won't even negotiate with the IPU - citing competition law! The EU commissioner disagrees with their opinion - and last year we had an agreement to negotiate. Then Harney came along and changed the law. 8% cut in payments to otherr health profs - 36% cut in government income to us.

Short and simple.
 
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Asa matter of interest - how much does each job lost cost the state on average? Say a very conservative 25k per annum global sum including reduced PAYE etc. Say 5,000 jobs aren't lost - its only 3,000 (personally I think it'll be v close to the 5k). 3,000 by 25000 = 75million euro cost (conservatively) Harney estimates the cuts will save 133million per year. Shurely shome mishtake?

Other figures: HSE annual budget 14 billion euro.
Public service pay bill: circa 20 billion euro.

Yet we get the law changed for special cuts!
 
It's great to have a number of pharmacists engaging on this important topic. It would be better still if they provided some answers to the questions being asked.

For example, what is the typical split of revenue between OTC and prescriptions in a pharmacy?

It's not quite fair to focus solely on the pharmacists, mind you. There are others taking large amounts of money along the supply chain. For example, the manufacturers manage to encourage the GPs to prescribe particular products, through 'training' (usually provided in a very nice location, with very nice food and drink attached) or 'education' (usually provided by a bubbly, blonde ex-nurse who jumped at the chance to swap a Mondeo and regular hours for getting abused by drunks.
 
I agree with the thanks to pharmacists in engaging in this discussion. I know my posts may sound like an uninformed rant but I'm learning from the links.

I've found a very interesting website that gives me the pharmacy trade price.

It is:



My two examples:

14277 Artelac Eye Drops 10 ml. (B) €2.51 - I pay 4.56 euro every time

30973 Lamisil Cream 30 G. (B) €11.9 - I know this retails at 27 euros plus.

So who pockets the money?
 
The potential loss of jobs in a sector is not a valid argument against reforms in the system if it is not offering value for money to the state.

The Irish consumer and tax payers deserve a fair system and it is clear from above discussion that this has not been the case until now.

Roll on reforms
 
What restrictions?

Price restrictions as the prices are set centrally. No point in a supermarket setting up a pharmacy counter if it cant charge cheaper prices that high street pharmacy.

The whole industry is a disgrace - flouts the free market. There should be no price setting negotiations - the price should be determined by the market.
 

On the artelac - the government makes more than I do. I add a 50% mark-up (33% margin) = 1.25 euro. The government then gets 21.5% VAT (=1.56 euro) plus corporation tax, PAYE from me and my employees, rates, professional registration fees etc. - as with any other retail business it must be added.
Same with Lamisil 30g. Govt gets 4.59 in VAT. I charge a 50% mark-up (5.95) plus in this case a dispensing fee (which can vary between pharmacies - its not set). My fee is 3.50 euro. Which comes to 25.94 for that. It is also now available OTC in 7.5g tubes (ask for the generic version its cheaper). My price on the OTC generic is 4.56 euro - same as the artelac coincidentally. You can buy 4 of these OTC for less than the price of the 30g Lamisil on prescription. Mention it to your pharmacist - he/she may not be aware of this.

As for the split in business between OTC/prescriptions - it depends on the business. As a small, local, independent pharmacy mine is roughly 20/80. A typical Boots would probably be 80/20.
 
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My two examples:

14277 Artelac Eye Drops 10 ml. (B) €2.51 - I pay 4.56 euro every time

30973 Lamisil Cream 30 G. (B) €11.9 - I know this retails at 27 euros plus.

So who pockets the money?

The manufacturers of the products.

If you go to a Doctor and (s)he prescribes a particular product, say Lamisil or Artelac, the product you will get is set. The maunfacturer will be the same one, ie only one company makes Lamisil and another makes Artelac. All pharmacies in this country use one of 3 main wholesalers.
There is no competition before retail level.
The Government subsidises a large chunk of total drug costs in this country. They set drug prices with the IPHA companies. Wholesale margin is set between the PDF and IPHA.

So the makers of Lamisil in Ireland charge our government one price and the makers of Lamisil in Spain charge the Spanish government a totally different price. Pharmacists do not set the prices of drugs in Ireland. Most pharmacists agree that the prices of drugs in this country is too high. Unfortunately they can do nothing about it, they are not party to the IPHA or APMI agreements.
 

This is incorrect. There are no price restrictions. For example, I saw a bottle of Zirtek liquid on sale for €7.50 in one multiple pharmacy recently while it is on sale for over €11 alsewhere.

I don't know why more supermarkets here don't have pharmacies in them but there is no reason why they can't. Obviously they aren't going to start now that pharmacy renumeration has been slashed.

gearoid, VAT. letter to your TD if you're that bothered
 

Thanks outperform.
That was a very helpful post.

I wanted to see where the difference is between what I buy in Barcelona and what I buy in Dublin. This gives me a lot of information.

It looks like everyone is getting a cut!

I do try to buy generics today but many pharmacies don't stock specific ones that would save money. Domperidone is usually only available branded as Motilium whereas Rowex Domerid is far, far cheaper. I only ever seem to find it in the midlands and west.

I wonder whether the manufacturer's are getting higher prices as the pharmaceutical sector is such a big employer and the government wants to placate them in some way?

It would seem from the deal that the HSE have a right to source cheaper drugs but possibly don't.

gearoid, VAT. letter to your TD if you're that bothered
I was musing about that in a quiet moment in work as it happens!
I am angling for a job on the board of the CAI but it seems they want colourists not competition activists!
 
I wonder whether the manufacturer's are getting higher prices as the pharmaceutical sector is such a big employer and the government wants to placate them in some way?
Bang on. Gov doesn't want to upset big pharma.
Too many jobs + exports at stake.
 


From a Pharmacist (who doesn't own a shop):

2 good questions, Protocol.

A1. Over 33% of the pop have GMS cards, but that cohort of patients has a much greater usage of medications than the mostly younger, mostly wealthier people who don't have cards. Overall, 74% of the cost of the country's drugs bill goes on GMS prescriptions. A little higher than the figure for Outperform's pharmacy.

A2. Why should it cost €640M etc? Put simply, because a medicine is not the same as a stapler or a roll of sellotape! Pharmacists provide a valuable service in ensuring the safe and effective supply of medicines. Additionally, we provide other services such as free advice without appointment, which amongst other things reduces unneccessary visits to GP or A&E. PriceWaterhouseCoopers detemined that the provision (for free) of these services by pharmacists saved the public and the Excehquer €460M in 2007.
Also, a fair chunk of that €640M goes towards the wholesalers' profit, not the pharmacist.
So, we get paid less than €640M, to provide ALL our services, the free ones and the remunerated ones!
 
Pharmacists are willing to play their part on reforms and cost-cutting. It is the scale of the reforms that are breath-taking. It is an abuse of democratic power to use the financial services emergency bill to reduce other professionals payments by 8% and pharmacists by 30-40%. This will immediately leave hundreds of pharmacies closed down and unemployed. Reforms should be managed in a more responsible manner.
 

I feel we are oversupplied with pharmacies at the moment and maybe some of them should close down the same way as many other non-profitable retail businesses have had to. I live in a small town and we have 5 pharmacies. I feel this is too much. 2 pharmacies opened in the last 2 years, These I feel are not offering enough diversity to merit there
being 5. If this is repeated tyhroughout the country then the closure of pharmacies makes sense as there didn't seem to be a market for them in the first place.
 
I have seen numerous instances where Greek and Italian prices are actually on the medicine.

So, is that someone actually avoiding the local wholesaler? You were very limited on the actual details.

What's happening there, Gearoid, is a case of what's called Parallel Importing. Let's say Manufacturer A makes a product B, and had licenses to sell it from the relevant authorities in the various EU countries (In Ireland, it's the IMB, and the license is called a Product Authorisation or PA. There should be a PA no printed on the packaging, if you get your prescription meds in their original box).
The manufacturer sells the product to the various wholesalers in each of the countries. Now this is the vital bit: the price is different in each country. In Ireland, that ex-factory price is set by an agreement between the manufacturers and the Government, and the wholesalers sell it to pharmacies at the ex-factory price plus a 17.66% mark-up (which is equiv to a 15% margin). This is the cost price to the pharmacy, which will have VAT added to it if appropriate. Up to now, this figure (we'll refer to it as the invoice price) is the basis upon which the Govt calculates how much it has to pay the pharmacy. Typically the pharmacy will also use this price as its base for calculating the selling price on a private prescription. My point here is that the pharmacy has NO SAY OR INPUT into what the invoice price is, only in what they do afterwards.

Now, remember I said the ex-factory price is different in each country. In Spain and Greece especially it is only a small fraction of the price here. I'm not sure why, but I believe it has something to do with different intellectual property rights laws there. So why don't we just buy from the spanish factory? It's a free European market, isn't it? Well, yes and no. Pharmacies in Ireland are required by law to purchasse their supplies from wholesalers that are licensed in Ireland. And in general, the product they supply is the product that comes direct from the manufacturer.

That is where Parallel Importing comes in. There are a small number of companies who engage in this practice. A couple of examples are PCO and Imbat. What they do is track fluctuations in prices of various meds in various countries. When they ID a product and a pair of countries where the difference in price is big enough to make it worth their while, they will:
a) Apply for a Parallel Product Authorisation (PPA) number from the IMB (or corresponding body in destination country)
b) Buy up all of the product they can get their hands on
c) Do whatever labelling/repackaging they have to do to satisfy legal conditions in destination country. This will include the PPA no printed on the packaging, similar to the PA number mentioned above
d) sell the repackaged product for the best price they can get (which, if they want it to be reimbursible on Govt-paid schemes, has to be agreed with the Govt in the same way as the 'regular' products are)
Once again, the pharmacist has no say in the price he pays.
By the way, this is all perfectly legal.
If you get a product from a pharmacy that has, for example, the days of the week printed in French, this is probably a Parallel Import. In some cases, and one that I know about is Spain, there will be a price printed on the box, beside the barcode or the expiry date. As far as I know, but I am open to correction on this, this price is what the pharmacy in Spain would buy the product from a Spanish wholesaler for, NOT the price that the consumer pays in the Spanish pharmacy.

So why don't all pharmacies just use the Parallel products? A couple of reasons. Firstly, some patients don't like them or trust them. Secondly, not very many products are available in this way as it only happens if the price differentials are right. Thirdly, only a comparitively small amount of each product is available, as the Parallel Importers have to pick up what they can in the source country, without leaving a shortage of supply there. Fourthly, the price difference by the time the Parallel Importer has done his bit is really not usually very much, and it may not be worth a pharmacy's while various reasons such as he may fall beneath a target set by his main wholesaler.

Unfortunately, there do exist SOME pharmacies who exploit this for their own benefit. If your pharmacy is supplying you with a PI product, you should make sure that they're CHARGING you for the PI product, so that YOU'RE the one to benefit from this reduced cost. MOST pharmacies who supply PIs will do this as a matter of course. However, as in every barrel, there may be a couple of rotten apples.

Hope this helps. Your questions/doubts about Spanish prices etc should be answered now. Answers to other questions are for another post; this one's long anough already!

One more thing, though, and if you have read all the previous posts you'll know that yes I'm a pharmacist and no I don't own a shop. My interest has been declared. Please believe me when I tell you that there is no cosy cartel of pharmacists keeping prescription prices artificially high compared to Spain etc. The difference in prices are ALMOST ALL caused by the fact that we have to buy them at a much higher price than in other countries, and then we have to try to make a profit when we sell. And as everyone knows, that's getting harder and harder these days (and will become virtually impossible if/when the minister's cuts go ahead).
 
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What I would do:

reduce wholesaler mark-up from 17.65% to 10%

reduce pharmacy mark-up from 50% to 33% or maybe 25%.

Ex-factory = 100
Wholesale price = 110
Pharmacy price = 146.30 or 137.50
 
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