Doctors slam Albanese government’s new ban on prescription medicine discounts

Doctors have come out against the Albanese government’s new ban on prescription medicine discounts — which currently save pensioners $20 million a year and cost taxpayers nothing.

Exclusive: Doctors have slammed the Albanese government’s new ban on prescription medicine discounts — which currently save pensioners $20 million a year and cost taxpayers nothing.

In a submission to a Productivity Commission inquiry seen by The Daily Telegraph, the Australian Medical Association says the move by federal Labor “generates no savings for the government and is the opposite of the direction policy … should be headed.”

The AMA instead argues chemists should be free to “discount medicines as much as they would like,” as happens in New Zealand.

In 2016, the then Coalition government permitted pharmacists to discount prescriptions on the Pharmaceutical Benefits Scheme (PBS) by $1.

The only big chain that did so was Chemist Warehouse, which today sells many essential medicines to pensioners for $6.70 instead of the PBS “co-payment” amount of $7.70.

The government is trying to stamp out Chemist Warehouse’s practice of discounting some prescription medicine by $1 less than their current PBS cost. Picture: NCA NewsWire / Gaye Gerard

The Daily Telegraph understands the Chemist Warehouse discount has been saving pensioners about $20m a year on medicine bills.

The AMA said “we know that parts of the pharmacy sector have demonstrated the capacity to provide significant discounts for patients and there is no apparent policy reason why this should not be further encouraged.

“It happens overseas and in New Zealand there is evidence that patients can face no co-payment at all to access medicine because of discounting arrangements.”

When Chemist Warehouse entered the Kiwi market in 2017 it made common drugs free by covering the standard $NZ5 dispensing fee.

However, in Australia, the discount has been capped since its introduction. And now, under the change announced in the recent budget, the saving will reduce by the rate of inflation and eventually reach zero.

The Grattan Institute has also criticised the axing of the $1 discount, saying it dampens price competition.

The opposition says the Albanese government is merely freezing prices, rather than reducing them. Picture: NewsWire / Monique Harmer

The powerful Pharmacy Guild lobby group has taken credit for the axing of the chemist-funded optional discount.

A guild spokeswoman said the end of the discount was “good news for patients” because it would instead become “universal and funded by the Commonwealth government”.

However, according to the opposition, the government isn’t actually stepping in to provide a $1 discount.

Instead, Labor is “merely freezing the current costs of PBS drugs” rather than increasing the co-payment with inflation, said Coalition health spokeswoman Anne Ruston.

Put simply, instead of the co-payment rising to $8.70 per script over about five years, it will stay at $7.70, thereby allowing the government and guild to claim a $1 discount is being “phased in” — not out — and that it is universal.

Over those five years, the permitted discount will erode to nothing, bringing Chemist Warehouse’s prices up and into line with all other pharmacies.

Health Minister Mark Butler’s spokeswoman said “the optional $1 discount was failing to drive competition and make medicines cheaper for the overwhelming majority of scripts at the vast majority of pharmacies.

“We will phase in this $1 benefit by freezing indexation of the PBS co-payment, so it doesn’t rise with inflation, until all PBS prescriptions are $1 cheaper” than would have otherwise have been, Mr Butler’s spokeswoman said.

Chemist Warehouse, which is in the midst of a politically sensitive merger, would not comment for this story.

But on May 15, after the budget was released, it issued a statement saying the government was imposing a price increase on Chemist Warehouse customers for PBS medicines.

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