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Crystal Ball Gazing Has Never Been Harder

Issue: Issue 82: May 2009
Author: Neil Retallick

Where I work we’re doing what a lot of other people are doing at this time of year.
We’re trying to forecast the future and commit to budgets for the next fiscal year.
As it turns out, this year the future for community pharmacy seems to be less predictable than it ever has been.
The fog is swirling in our crystal ball.
Nothing is clear.

The CSO emerged out of the fog three years ago, changing the future for pharmacy wholesalers and community pharmacy forever.
That wasn’t a possible scenario just 12 months before.
The advent of the CSO was the catalyst for significant changes in the services provided by the CSO Distributors – and the prices they were charging for the PBS medicines they supplied.
Three years on and some are predicting that when the fog settles this year the CSO will have gone from whence it came.
Notwithstanding that the Government’s objectives appear to have been met and that service levels to community pharmacies have been sustained.

Over that same period, community pharmacy has had to come to grips with a raft of Treasury-inspired initiatives all intended to reduce the cost of PBS medicines.
Amongst these, the revenue reducing WAMTC was effective in wringing the rag tighter each month, cutting into the income streams of all pharmacists.
Having worked through these continuing reductions, pharmacists were last year confronted with the PBS Reforms.
Thanks to the good work of the Guild, the financial impact on pharmacists was ameliorated in the short term.
However, this period was one of considerable angst across the industry. Many suppliers were significantly impacted.

Some are now gazing into the crystal ball and seeing what could be another acronym emerging. WADP. Weighted Average Disclosed Pricing.
This wasn’t supposed to appear next year, but that was the other change that many crystal balls foresaw - the change of Government.
And that change allows the question, does this Government have to honour the agreements reached with the previous one?

Certainly this Government can argue that the times have changed for it as well.
When it was campaigning to win Government, the Labour opposition didn’t foresee the global financial crisis.
A strong economy has weakened dramatically.
Surplus has dissipated into deficit.
Tax cuts funded out of excess revenue might become taxes to fund debt repayments.
Deals done might be rescinded.

The fog will clear a lot on the evening of May 12.
The tenor of things to come in the next Guild-Government negotiations will be plain for all to see.
We will be able to finalise our planning – at least for the foreseeable future – as will everybody else in this industry.
Likely profit margins will be set and revenue settings determined.
Then it will be back to business.
The business of supplying needed medicines to average Australians all over the country wherever they are.

That’s what’s missing in all this.

In the Government’s crystal ball, I wonder if the image of an average Australian ever emerges.
I know it does in the crystal ball of community pharmacy.
Every day community pharmacists have average Australians emerge at their dispensaries wanting their support as healthcare professionals.
Every day drug manufacturers produce drugs for average Australians and every day wholesalers ship drugs across the country for delivery to average Australians.

In this scenario, what would most likely produce the best outcome would be if all these crystal ball gazers were looking into the same crystal ball – at the same time and together.
Then they would all see what they all wanted to see, as all crystal ball gazers tend to do, and what everybody else was seeing as well.
Then we would be on the path to achieving the best outcome for the average Australian.

Let’s hope that in these tough times, the Government has the fortitude to take the lead in the collaborative effort that tough times demand.

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