Additional $92m, or 5pc, government funding for pharmaceutical wholesalers

There is also a new floor price for drugs sold under the pharmaceutical benefits schemes (PBS).

National Pharmaceutical Services Association chair Mark Hooper, who is also Sigma’s chief executive. Picture: Stuart McEvoy

Pharmaceutical wholesalers will receive an additional $92m, or 5 per cent, funding from the federal government to meet its community service obligations and combat years of tumbling prices for essential drugs.

Health Minister Greg Hunt announced the additional funding on Tuesday, as well as a new floor price for drugs sold under the pharmaceutical benefits schemes (PBS).

Currently, pharmaceutical wholesalers including Sigma Healthcare, Australian Pharmaceutical Industries, Symbion and National Pharmacies receive 7.5 per cent of the value of PBS medicines from the government.

Given the price of PBS drugs has fallen steadily in recent years, to the point now where 85 per cent of all medicines under the scheme are priced at less than $15, wholesaler margins have fallen dramatically. For example, if a PBS drug is priced at $1, they receive 7.5c.

But Mr Hunt has introduced a $5.50 floor price under the new five-year agreement, which expires in 2025. This means wholesalers will receive 7.5 per cent of $5.50 for any drug that falls below that price.

“We are pleased to have reached agreement with government on funding to support Australians with timely and equitable access to medicines,” said National Pharmaceutical Services Association chair Mark Hooper, who is also Sigma’s chief executive.

“After a decade of declining funding due to the ongoing impact of PBS reform, it has never been more important to invest in the logistics network that is relied upon to deliver medicines to all parts of the country.”

“Implicit in this new agreement is recognition of the capability and value that the wholesalers provide in supporting government, Australia’s PBS, medicine manufacturers and community pharmacy. New government funding will allow investment with confidence in things such as distribution centre infrastructure, automation, technology solutions and jobs.”

 

Full access

The aim of the Community Service Obligation (CSO) Funding Pool is to ensure all Australians have access to the full range of PBS medicines via their community pharmacy.

The CSO Funding Pool financially supports pharmaceutical wholesalers to supply the full range of PBS medicines to pharmacies across Australia, regardless of pharmacy location and the relative cost of supply.

Mr Hooper said the four wholesalers stock and distribute more than 300 million medicines each year to Australians via 34 national distribution centres, providing a daily delivery service to pharmacies in metropolitan, rural and remote locations, generally within 24 hours of orders being placed. This includes stocking and supplying specialist low volume, high-care medicines to the small numbers of patients who rely on them, he said.

“We are very proud of our role in the health system, particularly in recent months as we have overcome the dual challenges of the New Year bushfires and COVID-19 restrictions, which placed extraordinary and sustained pressure on our systems.

“Our distribution centre network is on the Attorney-General’s critical national infrastructure list for good reason.

“Ultimately, it was the collaboration between government, manufacturers, wholesalers and community pharmacy that enabled critical services to be delivered to the community during the bushfire crisis and COVID-19 pandemic and these new agreements recognise this work.”

Sigma Healthcare shares closed up 5.1 per cent on Tuesday at 62c, while API jumped 5.4 per cent to $1.17.