Why medicines cost more in Australia and how to get a cheaper script at the chemist

Five more charges are added to the price of prescription medicines that increase their cost. This is how it works and what you can do to get a cheaper script.

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Pharmacists are adding up to five additional charges to the price of prescription medicines that nearly quadruple the cost.

A News Corp Australia investigation has found the problem has been made even worse by a new agreement reached in secret between the Pharmacy Guild of Australia and the federal government.

The price of the most commonly used prescription medicines plummeted after they came off patent in recent years, with 14 of the most common prescribed drugs now costing less than $6 when they leave the manufacturer’s door.

Some, like the antibiotic amoxicillin cost as little as $1.20 per pack to produce.

However, under a deal reached in secret between the Pharmacy Guild and the government, chemists are permitted to add five separate fees totalling $18.11 that can drive up the cost to more $20.

The fees – which cover the cost of pulling the packs off the shelves and sticking a label on them – can be even higher for more expensive medicines.

The charges are set out in the recently negotiated Seventh Community Pharmacy Agreement which governs what chemists can charge for medicines supplied under the nation’s medicines subsidy scheme.

Under the deal – reached between the Pharmacy Guild of Australia which represents 3500 pharmacy owners and the federal government in June – pharmacists can add on the manufacturer's’s price:

*a wholesale mark up worth 41 cents (from January 2021)

*an administration and handling fee $4.28

*a dispensing fee $7.74

*a safety net recording fee $1.29

*an additional allowable patient charge $4.39

It can also be revealed the price of the most commonly prescribed medicines could rise by up to 67 cents per script from January as a result of this new agreement, which was signed in June.

Consumer health groups were banned from taking part in the negotiations over the increased charges which are well in excess of inflation.

The Consumers Health Forum chief Leanne Wells said she is “disappointed that the new Seventh Community Pharmacy Agreement between the Federal Government and pharmacy owners has failed to give more weight to proposals for greater input from consumers and more transparency”.

“The prices you have listed for general patients include the dispensing fee, which is appropriate recognition of the professional service and clinical responsibility of the pharmacist,” the national president of the Pharmacy Guild of Australia George Tambasis said.

“Consumers can and do shop around for the best price if that is their priority,” he said.

Discount pharmacies rarely add all these charges to the price when they supply a general patient.

An investigation of pharmacy prices by News Corp Australia shows some discount chemists add total fees of just $3 to the manufacturers price, while smaller suburban pharmacies as much as $18.11 in additional charges.

Chemist Warehouse chemist Anthony Allan. Picture: Peter Wallis

Pharmacist Anthony Allan who runs four Chemist Warehouse stores in Queensland said the chain had saved consumers more than $50 million by passing on a $1 discount on all scripts, a discount other chemist chains could offer customers but failed to do so.

“We know Terry White and Priceline have scaled prices that are different in different areas, with us no matter where you are you get the same price and we are proud of that,” Mr Allan said.

Chemist Warehouse was able to charge as little as $5.60 for many scripts because of the huge volumes they sell.

“There is no smoke and mirrors, we have buying power and we pass on the savings, we don’t take any cream off the top,” he said.

It’s the hefty fees allowed under the pharmacy agreement that mean the nation’s medicines subsidy scheme is no longer cutting the cost of drugs but pushing up the price.

General patients only receive a government subsidy on their medicine if it costs less than $41.

One in three prescriptions dispensed under the nation’s drug subsidy scheme now cost less than this and are no longer subsidised by the government – meaning some patients are paying four times more than it costs to make them.

Duncan Jardine, 35, with daughters Eva, 2 and Celia, 5 in Canberra. Picture: Sean Davey.

Duncan Jardine pays almost double the price for his prescription medicine if he can’t get to a discount chemist, money his family could put towards a holiday or activities for their children.

“You want to try and support local people but when it’s double the price, like that’s, I can’t do that, can’t justify that at all. It’s very hard,” Mr Jardine told News Corp Australia.

The Canberra father of Eva, 2 and Celia, 5, said he did not understand why some chemists charged almost double the price for the same medicine.

“There is a PBS for a reason. You should be getting same price wherever you go or similar price,” he said.

Without access to a discount chemist his medicine bill would be hundreds of dollars a year higher.

“It pays to shop around. I mean, like definitely the discount chemists are the place to go,” he said.

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HOW TO GET A CHEAPER PRESCRIPTION

Most people are unaware they could save up to $15 per script on their medication simply by shopping around.

That’s around $180 a year if you take one regular prescription medicine but it could quickly amount to savings of many hundreds – even $1,000 or more if you are on multiple medications.

These huge saving can be made by general patients when the medicine they use costs less than $41.

Here’s how you can access those savings:

•Check out the cheapest medicine prices online at Chemist Warehouse, Your Discount Chemist, Pharmacy Online or other discount pharmacies and ask your local suburban pharmacist to match the price. Many chemists will do this if you ask, others may not.

•Find the nearest bricks and mortar discount chemist near you and get your scripts filled there. Make sure they are a genuine discount chemist by checking their prices against the prices charged by discount pharmacies listed above. Some pharmacies call themselves discount chemists but charge high prices for medicines

•If you live in the bush or an area without a discount chemist consider ordering your medicine online. If you use lots of medicine it can end up cheaper even if you have to pay for postage.

Chemist Warehouse offers free delivery on orders over $50, Pharmacy Online on orders over $99, Your Discount Chemist on orders over $149. Standard delivery costs $8.95 for orders under $50 at Chemist Warehouse, and is $9.95 at Pharmacy Online and Your Discount Chemist You will have to supply the online pharmacy with your prescription.

Ordering medicines online is about to become a lot easier later this year when the government rolls out electronic prescriptions in the form of a barcode that can be emailed or texted to an online pharmacy.

Make sure you order your next script before your current one runs out, it can take between three days to two weeks for medicines ordered online to be delivered.

Pensioners and concession card holders have their prescription costs capped at $6.60 per but even they can save on their medication costs.

The government allows pharmacists to offer a $1 per prescription discount the $6.60 pensioner charge, it’s a discount opposed by the Pharmacy Guild of Australia so most suburban chemists won’t offer it.

However, discount chemists like Chemist Warehouse, Your Discount Chemist and Pharmacy Online will offer pensioners this discount, reducing their script cost to $5.60.

COMMENT: ‘A GOVERNMENT THAT CARED WOULD ACT’

Something is seriously wrong when the nation’s drug subsidy scheme no longer cuts the price of medicines but actually pushes it up.

That’s what happening as a result of a cosy deal negotiated in secret between the Pharmacy Guild and the Federal Government.

And consumers and taxpayers are paying the price.

Almost one third of the money spent on the Pharmaceutical Benefits Scheme is paid not on subsidising medicine costs but paying the pharmacy owners who have a monopoly on dispensing medicines.

Instead of getting paid a single dispensing fee to deliver a medicine to a customer the Pharmacy Guild has negotiated five separate charges that amount to over $18 when dispensing a script to a general patients.

A medicine that costs just $1.20 when it leaves the manufacturer ends up costing a general patient almost $20 under this system.

The overpricing has become so outrageous it is causing the system to implode as discount chemists see an opportunity to enter the market and make a profit even though they undercut the agreed price.

A News Corp Australia investigation shows as a result of this new competition from discounters like Chemist Warehouse, the amount you pay for prescription medicine varies wildly and it can depend on where you live and whether there is a discount chemist nearby.

Our investigation found the people hit hardest by the monopoly rules were general patients who live in drought stricken areas in the bush who face a one to two hour drive to the neatest discount pharmacy.

These people who can least afford it pay the highest prices for medicine in Australia and monopoly rules block discount chemists from opening in these towns.

Three government inquiries have called for the monopoly rules in pharmacy to be scrapped.

A government that truly cared more about sick people than pharmacy profits would act.

Originally published as Why medicines cost more in Australia and how to get a cheaper script at the chemist