PHARMACIES ARE A funny business. On the one hand, pharmacists are healthcare professionals trained to care for their patients. Yet on the other hand, the owners are running a business and want to see profits.
But what should these profits be?
The most recent report commissioned by the Irish Pharmacy Union into the financial performance of its members shows that the average pharmacy has a turnover of €1.57 million and an operating profit of €246,783 or 16%.
Such margins are unheard of in the retail sector. To generate such profit, the margins on drugs must be high and they are.
I began my pharmacist days working as a locum in various pharmacies across Munster. As a locum covering holidays you don’t have any input into pricing. You do however face the customers struggling to pay. I used to dread bringing an inhaler out to a patient and asking for €85 when I knew how much of a mark-up the pharmacy was charging.
It was becoming clear to me in early 2013 that the sector was fundamentally flawed with overpriced drugs. Stories of patients travelling from Cork to Newry and to Spain for their medicines became commonplace at the counters.
The fact that people were travelling abroad to purchase medicine meant that the system was failing.
So why can’t we have these prices in Ireland?
I started Healthwave pharmacy in 2014 to bring affordable medicine to everyone in Ireland. It was a brand new pharmacy model. Just sign up as a member and your medicines are available at similar prices to those in Spain and Northern Ireland. Plus we’ll send a pharmacist to collect your prescription and deliver nationwide.
One week after launching we had 1,000 members signed up. By the end of 2014, over 10,000 had joined. This was clearly a huge issue for Irish consumers.
Studies have shown that the cost of medicines can result in up to 20% of people not taking them. In fact, recent research from UCC shows that in Ireland anti- depressants are often the first medicines to be cut by patients when cost becomes an issue. I feel strongly that affordable medicines should be a right, not a luxury.
Recently, I got a call from a woman who had stopped taking her anti-depressant medication, sertraline. The doctor had increased her dose which meant the price in her local pharmacy jumped to €44 per month. She couldn’t afford it.
Another example, and one that really irks me, is the cost of anastrozole – a breast cancer drug. Prices range from €34 to €50 per month at pharmacies, a margin of up to 90%.
Customers struggling to pay
Pharmacists have a code of conduct to remove any barrier to a patient taking their prescribed medications. To see the vulnerable struggling to pay is hard to stomach.
As a pharmacist, I believe that we have a duty of care to our patients to provide the most affordable treatments possible.
Predictably, our vision was met with huge resistance from an industry unfamiliar with competition. Following our launch in 2014, pharmacists complained to the pharmacy regulator that we were publishing our prices online and on leaflets. Why did pharmacies not want their customers to know what they are being charged? For the first time, consumers had a benchmark and could make comparisons. The retail pharmacy sector was trying to prevent transparency and was to my mind, toxic.
Essentially, Irish pharmacies charge private patients too much for drugs and we also spend too much on drugs as a health service. Only last month the OECD reported that Ireland has the second highest spend on pharmaceuticals after the US.
We spend 2-3 times that of our UK neighbours on drugs for common conditions such as cholesterol, stomach acid and depression. Our health system is at breaking point and something’s got to give.
How can we save money?
Whoever the next government may be, there is a way to save €400 million for reinvestment into the health service. There are three main areas - dispensing fees, generic medicines and supply of medicines to nursing homes.
The state pays pharmacies €350 million per year in dispensing fees on state schemes, such as the medical card. Dispensing fees are added to each item on your prescription and fees range from €3.50 – €5 per item, but with one exception, phased dispensing, which can cost €14.81 per item. Phased fees cost the taxpayer an estimated €80 million per year.
The first proposal is to move away from paying a fee per item to a monthly care fee per patient which would free up €170 million.
The second proposal relates to the amount we spend on the drugs themselves. A fundamental problem in Ireland is our low usage of generic medicines which are 40-50% cheaper than the branded versions.
Only 50% of medicines dispensed in Ireland are generic. In the UK this figure is as high as 85%. The net effect of this statistic is that the state is paying out for expensive brands when it should be paying for cheaper generics.
The Irish Fiscal Advisory Council has recently identified increasing our generic usage as a key measure in tackling our drug expenditure. Currently, pharmacists are only allowed to substitute 62 drugs with generic alternatives. This list needs to expand rapidly to facilitate a vast improvement in our generic usage.
Generic drugs in Ireland are not being utilised
Increasing our generic usage to the levels seen in the UK would save the state €210 million.
Finally, nursing homes. With life expectancy continually increasing with advances in medicine, more and more nursing homes will be needed to care for the elderly. The supply of medicines to nursing home residents is an area that should be tendered centrally bringing savings of €30 million to the taxpayer.
There is huge scope for savings in the retail pharmacy sector. Patients and taxpayers cannot continue to pay over the odds for medicine. Instead, we must have reform to spend our health budget more efficiently. Saving €400 million on the cost of drugs will allow investment into services that benefit the entire health system should be our goal.
Pharmacists have a huge role to play in this reform. I have no doubt that pharmacists can help reduce the amount of drugs we are dispensing as a country through formal reviews and can also ease the pressure on GPs and emergency departments by treating minor ailments. But it is time the reform the payment structure. The state, the health service and the people of Ireland need better value for money.
Shane O’Sullivan is managing director of Healthwave pharmacy. Healthwave is a member of the Irish Pharmacy Union of Ireland.