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Thursday, 31 August 1989
Page: 758


Senator WATSON(10.34) —I wish to draw the Senate's attention to the decision by the Pharmaceutical Benefits Remuneration Tribunal to slash dispensing fees for pharmacists by 23 per cent. This action is to be deplored. In fact, the entire viability of the pharmaceutical industry is now at stake. We have a Tribunal which has shown that it is clearly out of touch with reality. I believe that the current Tribunal should be recalled and be told by the Labor Government that its decision is detrimental to the community and also to the industry. This Government has the power to recall the Tribunal and to advise it on this matter. The Government should go one step further and should replace the present members with people who have a greater understanding and a greater depth of knowledge of the industry.

Members of this present Tribunal have no special expertise in the area of health care. That is absolutely disgraceful. Not one member is a pharmacist or has any dealings with the pharmacy industry. Appointees to the Tribunal should be people who have expertise in the pharmacy or related professions. It is not as if such people are not available. According to Mr Peter Ware, President of the Pharmaceutical Society of Australia, there are a number of combined pharmacists and barristers or pharmacists and accountants who are available. A senior member of the Small Business Development Corporation is a combined pharmacist and accountant. Yet not one member of the present Pharmaceutical Benefits Remuneration Tribunal has in the past had any pharmaceutical background or even connection with the pharmaceutical industry. We have to look at that in light of the Tribunal's judgments which will have drastic effects upon the income of many pharmacists. It is no good for the Government to say that it is an independent Tribunal. It is no use having an independent Tribunal if that Tribunal is made up of incompetent people who lack knowledge and background of the industry. It is no wonder that the Tribunal is coming up with such stupid decisions.

The pharmaceutical benefits scheme (PBS) prescription fee will no longer be related to or made up based on the cost of goods sold. It will only be a fixed fee related, firstly, to labour costs, and secondly, to non-labour costs. A fixed fee of $3.50 will now apply.

It is interesting that the comparison on which the Tribunal based its salary cost for pharmacists was right out of line with the amount the Government pays pharmacists in public hospitals. Meanwhile, the pharmacists who are in business have had to fund salary increases-usually on a percentage-and a 3 per cent superannuation award. This mark-up is especially worrying as pharmacists will no longer be able to afford to have a holding stock.

What could eventuate is that a prescription will be given to the pharmacists on one day and it will be sent to the wholesaler who will supply it and, in all probability, it will be dispensed the next day, at the earliest. So we will have a delayed problem so far as the patient is concerned. What about the aged who will have to come in the next day-another bus trip, another taxi fare, just to pick up the prescription? This may be the situation for the common, every day prescription and it will almost definitely be the case for the rarer prescription. The health care of the individual, particularly the elderly, therefore is very much at stake.

The Pharmaceutical Society of Tasmania noted an anomaly that exists: the proposed Tribunal charges will add to the hardship. The majority of wholesalers are already charging 3 per cent higher wholesale prices than recommended by the Federal Government, but the Government does not take into account the wholesaler's price; it takes into account the recommended price in payments to pharmacies, which is a difference. The pharmacist's margin is continually being whittled away.

The Pharmaceutical Society estimates that up to one-third of Australian pharmacists could go out of business. That is over 1,000 people, all small businessmen. This is part of the Government's attack on small business. The average pharmacy could lose $26,000 a year because of the cuts; that is, a small pharmacy would lose $500 income a week at a minimum. Larger businesses could lose $100,000 annually. At the same time, these same people have to fund heavy overdrafts with high interest rates to carry on their business because of the high overheads which they have to sustain. As I have mentioned on previous occasions, there are approximately 5,200 pharmacies in Australia. They are not only a major component of the small business sector but also a major employer of women. It is worth reminding the Government that 60 per cent of pharmacists and 99 per cent of pharmacy assistants are women.


Senator Puplick —And most of their customers are women, too.


Senator WATSON —That is right. I think it is appropriate at this stage that I should comment that I have a vested interest in this matter because my wife is a salaried pharmacist on a part time basis. Certainly these pharmacists, including my wife, will remember the Government's action when they next vote. Many pharmacists are already struggling as a result of the previous Federal Government's move and this latest blow will send many to the wall. With this proposed loss of income many pharmacists will find it easier just to close their doors. Those pharmacies that do remain will have to substantially restructure and curtail their costs. This can only be done through reducing staffing levels and also reducing stock levels. It is feared that many pharmacies will no longer be able to keep stocks of rarely used medicines. Again, this will detrimentally affect the elderly.

I think it should be pointed out that the Federal Government estimates it will save $20m by implementing its decision but I think every reasonable person who has looked at this so-called $20m saving must query its validity. So if over 1,000 pharmacies go out of business it means that in practical terms 1,000 businessmen who usually provide an income for possibly two or three people or more will have to find other jobs in a difficult market, adding, perhaps, to unemployment and other costs. People can no longer save or spend the same amount of money as previously.

The effect will be multiplied through the community. Studies are being conducted as to the multiplying effect of the loss of jobs in one industry in relation to the loss of jobs in other industries. For example, in the mining industry in the early part of this decade it was estimated that for every one job lost, four were lost in the related industries of transport, construction or manufacturing.

The point that I am making is that if the Government is going to close 1,000 pharmacies it is going to have a downstream multiplier effect greater than that across the economy. The situation is such that in the pharmacy industry we will see a practical out-working of the economy of this country if the decisions of the Tribunal are carried out. There will be a substantial loss of jobs and it will be detrimental to health care. The unfortunate fact is that many of the pharmacies forced to close their doors will be the very ones offering the most needed service. I refer to the pharmacies in the small towns and in isolated areas.

The Tribunal has not considered the cost to the community of the widespread pharmacy closures in these areas. The local pharmacist is often called upon to dispense free on-the-spot advice and because he or she is a health care expert the pharmacist can dispense that advice. Pharmacies continuing to operate will, of necessity, need to make staff cuts. There will no longer be room for on the spot advice in the larger urban areas. In those areas where the pharmacy has closed no such pharmaceutical advice will be available. In other words, the Tribunal's decision will set us on a path towards the lowest common denominator level of pharmacy practice in Australia.

People will go to the doctors and there will be greater cost to Medicare and to the nation. They will seek advice through a more expensive medium-through the doctors and not through the pharmacists. This will cause greater costs through wasted drugs, diseases caused by incorrect self-diagnosis or unnecessary demands on other parts of the health system. The Government just has not thought through the consequences. We have heard of unintended consequences resulting from tax decisions. We are going to have a lot of unintended consequences if this Tribunal's decision is carried out.


Senator Tambling —They want to socialise medicine.


Senator WATSON —As I mentioned, a visit to the doctor could now be necessary if there is no pharmacist in the local area-a much greater expense than to chat to your friendly pharmacist for no fee. Preventive medicine will not be practised to the same extent that it is practised at the present time. Expensive hospitalisation as well as lost productivity and unnecessary human suffering will be the result. The findings of the Tribunal talk about a special rate for pharmacies that may not be economically viable but are essential as contemplated under the Act.

The response to that is that Mr Peter Ware of the Australian Pharmaceutical Society feels that in country areas the supply of medicines outside normal business hours could well be jeopardised. The essential pharmacy allowance will not necessarily cover the costs involved. Many country hospitals throughout Australia do not have their own pharmacies. They rely on the local pharmacist to supply their medicines. The special rate here need not apply. Thus some country pharmacies may not even be able to obtain the special rate. Even so, the special payment of 35c an item on the first 1,000 prescriptions each month will do little to compensate for the much after hours activity that is often required by a country pharmacy practice. Quite often the pharmacist has to pay for the cost to put the particular prescription on a bus to go out to an isolated area. Overall the Tribunal's findings are a catastrophe for the community and for pharmacies.


Senator Tambling —What about aged people on pensions?


Senator WATSON —I have already covered those. It is going to be quite detrimental to the aged, particularly if they live in country areas. So the decision has been based on flawed information, on limited terms of reference and with little knowledge of the pharmaceutical industry.

Earlier I referred to the Tribunal's lack of expertise, lack of background knowledge and experience in the industry. Even honourable senators on the other side of this chamber are expressing concern about the decision but presently they have been muzzled. I believe that the Minister has to head off a back bench revolt. Indeed, he has to head off a community revolt on this issue. The Government is becoming oblivious to the concerns within the community. It is becoming blind. It is like the ostrich. The Opposition knows that because people are suffering, businesses are suffering. But the Government is becoming blind to the consequences of its actions over such a wide spectrum nowadays.

I still say that the Government should heed the warnings sounded by its own backbenchers. For example, neither this uncaring Labor Government nor the Tribunal has recognised the productivity improvements of pharmacists as a result of computerisation. The promises by government on issues such as quick payment are, for some pharmacists, honoured more in the breach than in the observance. The only recourse is to recall the Tribunal and to admit the Government's grave concern about the decision handed down. The Tribunal should then be advised to reconsider its findings in the light of the present reaction of the community and the pharmacy industry. Not only should that decision preferably be overruled but also the Tribunal should have placed on it competent employees. It will be too late to correct the effects of these findings if we wait too much longer.