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- Issue 81: April 2009
- Issue 80: March 2009
- Issue 79: February 2009
- Issue 78: December 2008
- Issue 77: November 2008
- Issue 76: October 2008
- Issue 75: September 2008
- Issue 74: August 2008
- Issue 73: July 2008
- Issue 72: June 2008

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Can the PBS Survive the Current Distribution Methodology?

Garry Boyd
From an Intellectual Capital Perspective

Issue 81: April 2009
Page: 1 of 1 Author's Profile | Send to a Friend | Printer Version

The year 1949 was notable.
David Ben-Gurion and Harry S Truman began their march into history by taking up the leadership of their respective countries.
A couple of notable politicians were born, namely Jose Ramos-Horta and Benjamin Netanyahu.
The North Atlantic Treaty was signed, leading to N.A.T.O being born, and somewhat perversely, on the 1st of April Eire left the British Commonwealth to become the Republic of Ireland.
And the PBS was born, being part of a grand plan initiated by Prime Minister Ben Chifley.
The PBS managed to survive, unlike many of the Prime Minister’s health plans, which were ruled unconstitutional by the High Court.

Medicines supplied by the PBS have increased from 137 in 1949 to nearly 1,000 today.
Is it workable?
The answer is of course complex, but a number of issues give cause to think the system must change if it is to maintain cost and distribution efficiencies.

The four key stakeholders are often disadvantaged by the behavior of the others.

1. The Pharmacy is the PBS contractor, and as such is disadvantaged insofar as income is
controlled by the DoHA, the drug companies and the PGA.

2. The PBS is disadvantaged to the tune of up to $1 bill per annum because of misuse of
medicines supplied by all sorts of bureaucratic inertia, bungling and inefficient administrative practices.

3. The drug companies, whether they are the manufacturer or the distributor, are
disadvantaged by the commercial arrangements they have set in stone for
themselves by way of how they conduct their business with Pharmacies and the
high cost of providing a level of service to urban Pharmacies that can easily be
described as excessive. And yes, they did it all by themselves.

4. The patient has become disadvantaged because of the falling standard of dispensing
practice in many pharmacies, which has been caused by a manic desire to dispense
prescriptions at a rate considered to be high risk.

To complicate this, it is expected that Colesworth will probably establish their own generic brands and distribution vehicles when they get a foot in the door.
Terry White has already set this precedent by establishing a brand of its own.

Why not have the generic companies tender the supply of individual medicines for each three monthly period?
Supply of the top 50 medicines might ultimately be provided by 15 different companies. There would certainly be some serious pencil sharpening then!

Why don’t the distributing drug companies take a leaf out of the Oil companies’ book?
Shell petrol is available Australia wide, yet they only refine in Victoria and NSW.
BP only refines in Queensland and WA.

Surely the distribution of drugs can be made more cost efficient.
Pharmacist proprietors should have the right to choose their preferred supplier, but the preferred supplier and the actual distributor may be different.
For example, the preferred supplier might handle all sales and commercial activity, but the goods may be delivered by another provider.
This is how oil companies distribute efficiently. All petrol in Perth is produced by BP, although all oil companies have a retail presence…..a sort of tit for tat system that works for everybody.

Or, if approved Pharmacies are the contracted PBS dispensing agents, why does the DoHA
not issue a PBS supply contract on a yearly basis to a distributing drug company?
Or, contract the distribution of PBS products to distributing drug companies in three specifically designated geographical areas?

Yep, it probably is, but we all know there is no such thing as being half pregnant.

We have a situation where the PBS allows its medicines to be distributed in an increasingly expensive free market environment but dispensed in circumstances that are becoming difficult to maintain.

If the DoHA imposed the same onerous commercial arrangements on those that distribute PBS products as those imposed on those that dispense PBS products, the playing field might just level out a bit and result in improved QUM and patient care, thus reducing PBS financial exposure.

Generic drug companies bemoan the excessive cost of distribution, but distributing drug companies appear incapable of sharing distribution costs that would enable an improved outcome for all stakeholders.
The distributing drug companies appear to be reluctant to accept that it is an expensive exercise to distribute to a land mass in excess of 7.6 million square kilometers, yet they plough on relentlessly, presumably in the name of profit, brand credibility and shareholder expectation.

Did I mention power driven corporate executives, sometimes known as psychopaths in suits?

How strange that the DoHA oversees sub-standard health care for indigenous folk, yet sees the unnecessarily indulgent service of medicines to pharmacies in urban areas as normal commercial activity.
This is not normal or fair commercial activity, it is dissolute. Nor is it in the best interests of the patient for pharmacies to operate on a lower stock holding simply because they know delivery vans are running around like taxis on a Saturday night in the misguided name of good service.

Sadly, the relationship between some of the stakeholders is often combative, caused by a deep seated mutual suspicion, to say nothing of the gorilla by the name of “Guild” sitting in the corner!

With so much at stake is it too much to suggest a more consensual loose confederacy might be in the interest of all?

Garry Boyd.

April 2009.


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