Pharmacies could lose more than $150,000 each annually over the coming years under Labor reforms that reduce the cost of many prescription medicines, the government’s analysis shows.
The government says allowing people to buy two months’ worth of medicine for the price of a one-month prescription will save patients up to $180 a year for each medicine.
But the Pharmacy Guild has been scathing about the government’s plans, claiming they will lead to medicine shortages and children overdosing.
Costings prepared by the health department , gives insight into the finances at the heart of the fight.
The department estimates individual pharmacies could lose up to $49,000 in the first year of the change, increasing to $158,000 in the fourth year. Pharmacies will in total lose about $1.2bn over the first four years, the costings estimate.
It modelled the loss of revenue on the reduction in government payments to pharmacies under the pharmaceutical benefits scheme, including dispensing and handling fees. The Office of Impact Analysis which assesses any regulatory change assessed the quality of the analysis.
The health minister, Mark Butler, has repeatedly said the money saved will be reinvested in community pharmacies, and has strongly disputed the Pharmacy Guild’s claims on medicine shortages and overdoses.
“Every dollar that the commonwealth will save from this measure will be reinvested back into new spending on community pharmacy programs,” he said when announcing the change last month.
The reforms will apply to about 300 common medicines listed on the PBS and will be implemented in three tranches from 1 September.
The government estimates it will save patients $1.6bn over the next four years and the move has been embraced by doctors, who say it will also help to free up GP appointments.
The department also modelled a policy to allow three months of medicine to be purchased for the price of one script. This would would have cut revenue for individual pharmacies by an estimated $210,000 in the fourth year. That model was rejected by the government.
It also looked at the benefit to patients, citing research that one in five Australians aged 16 to 24 found prescription medication to be unaffordable, with more than 770,000 Australians delaying or not filling their scripts because of cost concerns in 2021-22.
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“The proportion of people who delayed or did not get prescription medication when needed due to cost increased to 5.6% in 2021-22, from 4.4% in 2020-21,” the OIA reported.
“In addition, those Australians with a long-term health condition were more likely to delay or not get prescription medication dispensed due to cost than those without a long term health condition – 6.4% compared to 3.8%.”
The Pharmacy Guild and pharmacies have vowed to continue to fight the changes, saying it will send businesses “to the wall”, particularly in smaller and regional communities.
Butler says there will be “additional support” to pharmacies in rural communities, including doubling the rural maintenance allowance in rural areas to help offset revenue pressures, with $80m set aside in the budget for that purpose over the next four years.
Nearly $650m over the next four years has been set aside for community pharmacy programs, with the promise of committed ongoing funding, with additional funding provided for community pharmacy vaccination programs.