s Analysis: The Pharmacy Alliance & API Dispute | I2P: Information to Pharmacists - Archive
Publication Date 01/04/2011         Volume. 3 No. 3   
Information to Pharmacists

Editorial

From the desk of the editor

Welcome to the April home page edition of i2P. A lot certainly happens over a month in pharmacy and health-related activities.
When we first started publishing our primary concern was to cover pharmacy issues within Australia, delivered monthly. Eleven years on we now cover global pharmacy and associated health issues on a daily basis, but delivered weekly.
New areas embracing climate change, food growing and processing and information technology are all increasing areas of health concern. Their impacts translate into systems that affect health negatively or positively and for all such contemporary issues, pharmacists need to have a working knowledge and understanding that translates into an effective pharmacy service
This month we are introducing a new column called Pipeline, and you will find it near the top of the centre column of the i2P home page.

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News Flash

Newsflash Updates for April 2011

Newsflash Updates

Regular updates from the global world of pharmacy. 
Access and click on the title links that are illustrated.

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Pipeline

Pipeline for April 2011

Pipeline Extras

A range of news snippets and links that may be of interest to readers.
Pipeline Extra simply broadens the range of topics that can be concentrated in one delivery of i2P to your desktop.

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JB Hi-Fi reports sales and profit increase without selling washing powder. How can this be?

Neil Retallick

JB Hi-Fi has continued its phenomenal success of the last decade, recently reporting a sales increase of 8.3% for the first half of the F11 year.
EBIT rose an amazing 14%. The question is, how can they do this without selling washing powder? Community pharmacists need to take note.

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Community Pharmacy Being Pushed into a New Model

Dr John Dunlop (PGDipPharm, MPharm, DPharm(Auck), FACPP, FNZCP, FPSNZ, MCAPA)

Recently Pharmac and the 21 District Health Boards distributed a consultation document describing some dramatic changes to funding the community pharmacy dispensing process.
The goal seems to be to change the focus of community pharmacy away from dispensing to patient care so that dispensing will be just a part of the new service delivery model.
The motivation for the consultation was driven by community pharmacy’s promotion of a concept called ‘close control’ whereby the normal three months stat dispensing could be changed to monthly, or in most cases, weekly dispensing.
The costs to government for these extra dispensing fees amount to 26% of total fees claimed, have been rising at 7-8% per annum, and are considered unaffordable.
There is no doubt that some pharmacies were stretching the boundaries and these people have highlighted the dispensing costs to funders who are determined to move community pharmacy remuneration to funding patient focused care.

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Major Revamp of PBS Needed

Rollo Manning

A PharmCare Agency is needed to operate the PBS with the retailing left to specialist operators skilled in that field.
The pharmacy presence in the Australian shopping landscape has to change and diverse itself into a retailing block and a professional service block.
The former will be for those consumers who want cheap places to shop, obtain free medical advice and a product to fix a problem without going to a doctor.
This is an undeniable need.
Pharmacy graduates who enjoy the thrill of the retailing sector – cut price everything and suspect products with refutable claims – will man these outlets and be limited in the claims they can make as a professional outlet.

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A Matter of Trust

Barry Urquhart

Editor's Note: Barry Urqhart's introduction for this month illustrates the predatory damge being done to the milk industry. We have also noted in recent weeks the discounting of alcohol products, an action that is both irresponsible and must eventuate in damage to health, particularly among our young people. Major retailers cannot be trusted as custodians of public health because of this behaviour.
All the more reason to keep pharmacy in the hands of pharmacists, but under competitive conditions.

COLLATERAL DAMAGE

In warfare, as in business, the casualties from direct conflict extend well beyond the main protagonists.
Australian retail businesses will experience that reality as a consequence of the "milk discount war" that is being waged by Coles and Woolworths, with understandable but reluctant participation by the independent supermarkets.

Retailing household milk at around $1 per litre is reportedly below cost. That is not sustainable without cross-subsidisation (potentially from liquor and petrol sales) and is arguably grounds for regulatory action on predatory pricing legislation.
Among the potential casualties will be smaller convenience stores, the relatively few dairy farms which remain operating in Australia and rural communities.

Comments: 1

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Practice reciprocity without keeping score

Harvey Mackay

When we were growing up, most of us learned to live by the Golden Rule:  Do unto others as you would have them do unto you.  Not "as they do unto you," but "as you would have them do unto you."
As working professionals, there is another manifestation of this rule, the Golden Rule for Networking.  It should permeate all your networking efforts.  But it goes against every naturally acquisitive, ambitious and self-serving impulse in each of us.
My Golden Rule of Networking is this:  Reciprocity without keeping score.  Simply stated, it means what can I do for you without expecting anything in return?

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Colloidal Silver Tongued Devil

Loretta Marron OAM BSc

“It’s stinks when he uses it and then he leaves the darn contraption on the top of my fridge!”; so complained a friend of mine. She was talking about a generator that her husband owned which he was using to make his own colloidal silver.
He was quick to defend his recent purchase and he then went on at length to proclaim the benefits of this foul smelling not-so natural remedy.
Despite his enthusiastic anecdotes of the product, several authorities are cautioning against it.
So what is it and what problems is it causing?

Comments: 1

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Yamaha VSP-1 ambient noise generator shields your voice during counselling sessions

Staff Writer

One of the reasons that pharmacies have not adapted to the provision for privacy locations (counselling rooms etc.) is because of the cost to provide, and the space that is taken up.
It's like the "chicken and the egg" - the space may not generate a return because it has to low a usage, but if the is provided in a convenient  and attractive location, usage would increase.
So what are the cheaper alternatives?

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Bullying - dealing with bullies in the pharmacy workplace

Kay Dunkley - BPharm, Grad Dip Hosp Pharm, Grad Dip Health Admin, MPS, MSHPA

Bullying can occur in many settings including schools, organisations and the workplace.
Health care professionals including the pharmacy profession are not immune.
The Pharmacists’ Support Service and the AMA Victoria Peer Support Service often receive calls from pharmacists and doctors who report bullying.
Bullying can be very difficult to deal with due to power imbalances and because the victim experiences disempowerment and loss of confidence.
It is particularly difficult when a junior professional such as a pre-registrant pharmacist or an intern doctor is reliant on a senior colleague for a “good report or a reference”.

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Global Warming to Point-of-Care Scanning

Mark Neuenschwander

I’ve been thinking about windmills, butterflies, and the global warming I am witnessing toward bar-code scanning at the point of care.
This morning I’m in the Netherlands on a train to Utrecht. Behind in Brussels, GS1 is concluding its Global Forum.
It was my honor to address this gathering of bar-code leaders representing 85 of its 108 national organizations.
Out my window, one of Holland’s enduring windmills slowly rotates in the fog.
Don Quixote comes to mind—the seventeenth century knight-errant who set out on horseback in Spain to slay windmills, which he imagined were “ferocious dragons.”

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Senate inquiry agreed to in Parliament— PBS to remote living Aboriginals to be examined

Rollo Manning

On 24th March 2011 the Senate agreed to a motion from Senator Rachel Siewert (Greens, WA) that
the supply of Pharmaceutical Benefits Scheme medicines to remote area Aboriginal Health Services
be referred to the Senate Community Affairs Reference Committee.
The special arrangements under Section 100 of the National Health Act have provided a bulk supply scheme with no value added component from a pharmacist.
Three reviews of the scheme in 2004 (Kelaher) 2006 (Urbis) and 2010 (Nova Policy) have failed to produce any significant improvement in the quality use of medicines by Aboriginal clients of health services.

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Through the Pfizer Looking-Glass

Peter Jackson

Analysts specialising in Big Pharma have begun to look at what may happen when they (the Big Pharma's) begin to fall over the “patent cliff” typified by Lipitor – the biggest selling drug of the largest drug manufacturer in the world.
In the rarefied atmosphere of the Pfizer’s of this world that have been allowed to grow so big they become insulated from the problems of lesser mortals i.e. what the small to medium companies have to endure to maintain their place in the sun.

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Pharmacists can help prevent Lyme disease

Neil Johnston

When the Hospital in the Home programs first commenced in NSW, I was privileged to be the lead pharmacist for Lismore Base Hospital, in conjunction with a clinical nurse educator and the doctor from the emergency department.
The challenge was to map out the various conditions that could be trapped in the emergency department with monitored treatments in the home.
The process was challenging, interesting and even exciting when you had a breakthrough in any aspect of delivery of the service.
The principal conditions treated included cellulitis and Lyme's Disease (the Northern Rivers Area of NSW is heavily infested with ticks).
I can remember one breakthrough being that for the first time our program could support a patient in an early return to work.

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Scottish Conservatives Get it Right for Pharmacy

Peter Sayers

A primary care universal health check is an idea that is being promoted by the Scottish Conservative Party, to be provided free for all persons aged 40-74 years and be available as a “drop-in” service through pharmacies.
The idea is contained in a manifesto and was published early this month.
"Working with community pharmacy, we will deliver a range of drop-in services catching the early signs of potential problems and saving our NHS substantial sums in the long run," the manifesto states.

Comments: 1

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E-Books overtaking hard copies

Staff Writer

Ebooks are beginning to overtake their hard-copy cousines as a percentage of total book sales.
In a recent media statement, the online bookseller Amazon stated:

“Amazon.com is now selling more Kindle books than paperback books. Since the beginning of the year, for every 100 paperback books Amazon has sold, the company has sold 115 Kindle books. Additionally, during this same time period the company has sold three times as many Kindle books as hardcover books.
“This is across Amazon.com’s entire US book business and includes sales of books where there is no Kindle edition. Free Kindle books are excluded and if included would make the numbers even higher.”

The impact is obviously being felt among Australia's major bookseller's with two being placed in liquidation recently (Angus & Robertson and Border's Book Store).
Bricks and mortar booksellers are being outpaced on two levels - online sales of hard copy and online sales of digital books.
Lower costs and user-friendly readers such as "Kindle" that have the look and almost the "feel" of a normal text page have convinced consumers to invest in the technology.

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Analysis: The Pharmacy Alliance & API Dispute

Neil Johnston

I have been following the recent relationship breakdown between the Pharmacy Alliance Group and national wholesaler, API Ltd.
The breakdown is seen by i2P as having been inevitable and is really a side-effect of the Pfizer initiative of taking back the supply chain in respect of its own products.
The triad of manufacturer (represented by Pfizer), the wholesaler (represented by API) and the pharmacy (represented by the Pharmacy Alliance Group) is a contemporary model, illustrating the general state of the tension between the respective parties, and is reflective of the entire Pharmaceutical Industry.

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The Physician Assistant

Neil Johnston

Back in 2006 when I was the Academic Pharmacist for the Northern Rivers University Dept of Rural Health, I was accidentally included in a major conference that they held at Murwillumbah.
The subject was primary health care and the day was facilitated by Dr Norman Swan of ABC fame.
The venue was a beautiful heritage building in Murwillumbah (located in northern NSW), that had been converted to a function centre.
To my surprise the attendees consisted of most of the movers and shakers connected with health, from the public system and from private enterprise.
All the health professions were represented with one glaring exception – pharmacy.

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E-HEALTH BENEFITS SPREAD AS NINE NEW SITES START WORK

Staff Writer

Mothers and new born babies, Australians suffering from chronic disease and patients in aged and palliative care are some of the first groups set to benefit from national health reform as nine new locations have been selected to lead the roll-out of e-health records.
Minister for Health and Ageing Nicola Roxon today announced the second wave projects that have been selected as e-health lead implementation sites for the Gillard Government’s $467 million national personally controlled electronic health records (PCEHR) project.

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Life work culminates in testing of cancer therapy in humans

Staff Writer

A cancer-fighting antibody identified by a researcher working at The University of Queensland and Queensland Institute of Medical Research (QIMR) will today be used to treat the first patient, in a Phase 1 clinical trial.
The trial is the culmination of many years work for Professor Andrew Boyd, Professor of Experimental Haematology at The University of Queensland and Head of QIMR's Leukaemia Foundation Laboratory.

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Zero Carbon Australia plan, revisited

Staff Writer

In 2010 the Beyond Zero Emissions group released a report with the University of Melbourne’s Energy Research Institute claiming that Australia could be powered by renewable energy sources by 2020.
Here its lead authors reply to some of the points raised by Dr Mark Diesendorf’s review of the report in ECOS 157.

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We need concrete answers to climate change effects

Staff Writer

Understanding how climate change could impact on the deterioration of the basic building block of much of Australia's infrastructure – concrete – is crucial to ensuring major assets such as roads, ports and buildings continue to perform up to expectations, according to a CSIRO report.

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Health reform in jeopardy

Staff Writer

A lack of consultation by the Federal Government over the establishment of the proposed new hospitals watchdog is risking the future of health reform.
AHHA Executive Director, Prue Power, said that the Commonwealth's failure to consult state and territory governments over critical legislation to establish the National Health Performance Authority (NHPA) is putting the future of health reform in jeopardy.

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Wind and waves growing across globe

Staff Writer

Oceanic wind speeds and wave heights have increased significantly over the last quarter of a century according to a major new study undertaken by ANU Vice-Chancellor Professor Ian Young.

Published in Science, the study is the most comprehensive of its kind ever undertaken.

Other authors include Swinburne University oceanographers Professor Alex Babanin and Dr Stefan Zieger.

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Pharmacy students learning in a virtual world

Staff Writer

Pharmacy students at The University of Queensland (UQ) are learning how to manufacture, test and prescribe tablet medications in a three-dimension virtual world.
UQ's School of Pharmacy is one of 10 universities from around the world that has collaboratively developed an innovative pharmacy learning resource using online virtual reality platform ‘Second Life'.

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High salt diets damaging Australian men's sex lives

Staff Writer

Getting across to men just how bad salt is for their health was the focus of a debate hosted by the University of Sydney's George Institute for Global Health yesterday as part of World Salt Awareness Week.
While the adverse affects of high blood pressure on men's sex lives is clear, the direct link between salt and sex is yet to be proven. There is, however, a huge body of evidence showing that salt is the main cause of high blood pressure which kills thousands of Australian men each year - mostly through premature strokes, heart attacks and heart failure.

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Experts push gastric surgery in Type 2 diabetics

Staff Writer

In a statement prepared for the International Diabetes Federation, 20 leading medical specialists have warned that the combination of diabetes and obesity is looming as one of the greatest public health threats of the 21st century.
The diabetes and bariatric surgery experts said weight loss surgery should be considered earlier in the treatment of eligible patients.

Comments: 1

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Home Farmer Social Network

Staff Writer

For those who can remember, the urban backyard used to be something of a market garden, with all sorts of vegetables under cultivation throughout the seasons plus a mix of fruit trees and vines.
As a young child I can remember mulberry tress, peach trees, lemon trees and a range of garden beds growing broad beans, cucumbers, chokos, peas,spinach,potatoes, parsley, mint, celery, passionfruit, carrots, water melon, rock melon, strawberries, lettuce, beetroot, broccoli, tomatoes and cabbage.
And all this within an 8km distance from Sydney's GPO.

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Green Tea Helps Urinary Incontinence

Staff Writer

A Curtin researcher has found drinking green tea may help alleviate Urinary Incontinence (UI) in middle-aged and older women.
Professor Andy Lee, from the Curtin Health Innovation Research Institute, collaborated with a Japanese research team to examine the effects of green tea consumption in a cohort of Japanese women aged between 40 and 75.
While UI was a problem for 28 per cent of participants, the results showed that those who drank four or more cups of green tea daily were significantly less likely to suffer from the condition.

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Depressive and anxiety symptoms reduce bone mineral density

Staff Writer

A new study has found a link between depressive and anxiety symptoms and a reduction in bone mineral density.
The study, published in the Journal of Affective Disorders, was undertaken by researchers from Deakin University, located at Barwon Health, and the Norwegian University of Science and Technology.
Researchers analysed data collected from over 8,000 men and women from central Norway who had participated in the internationally-renowned Nord-Trondelag Health Study.

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Pharmacy Clinics Becoming a Reality

Neil Johnston

Editor’s Note: Pharmacy has been talking about installing clinical services within its environment since 1978, when the PGA first identified three pharmacy models for the future – the traditional model, the supermarket model and a clinical model.
Mysteriously the PGA walked away from the clinical model and endorsed the supermarket model. Small pharmacy owners were disparaged, disadvantaged and discouraged over the following years.
It is now 2011 and the first glimmerings of funding support for a clinical model is now emerging from the Fifth Community Pharmacy Agreement.

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Analysis: The Pharmacy Alliance & API Dispute

Neil Johnston

articles by this author...

Neil Johnston is a pharmacist who trained as a management consultant. He was the first consultant to service the pharmacy profession and commenced practice as a full time consultant in 1972, specialising in community pharmacy management, pharmacy systems, preventive medicine and the marketing of professional services. He has owned, or part-owned a total of six pharmacies during his career, and for a decade spent time both as a clinical pharmacist and Chief Pharmacist in the public hospital system. He has been editor of i2P since 2000.

I have been following the recent relationship breakdown between the Pharmacy Alliance Group and national wholesaler, API Ltd.
The breakdown is seen by i2P as having been inevitable and is really a side-effect of the Pfizer initiative of taking back the supply chain in respect of its own products.
The triad of manufacturer (represented by Pfizer), the wholesaler (represented by API) and the pharmacy (represented by the Pharmacy Alliance Group) is a contemporary model, illustrating the general state of the tension between the respective parties, and is reflective of the entire Pharmaceutical Industry.

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This tension traditionally existed in the past, but each party had learned to live with, and accommodate, the expectations of one to the other.
That traditional model is now totally disrupted and new boundaries have to be formed up, with the activities conducted within those boundaries altered, upgraded or eliminated, but definitely re-defined to reflect pharmacy in the twenty-first century.
The issues that have been building up between pharmacy owners and non-pharmacy owners also need to be addressed.
It is possible that this new industry-driven disruption will create momentum that will generate a life of its own that may compel each side to have a fresh look at each other, and generate the opportunity to develop new pharmacy designs and services.

From their website, the Pharmacy Alliance Group is “a member-based network with 424 member pharmacies providing independent pharmacies the retail tools and expertise to improve their profitability and streamline their in-store operations.”
In 2008 the Pharmacy Alliance Group initiated a generic tender system, believed to be the first in pharmacy. The tender was done by molecule on volumes of $80 million p.a. and currently has 350 molecules on the best available discount.

Pharmacy Alliance appears to have provided an excellent service for its members having in 2009 strengthened its offering by amalgamating with the NSW pharmacy group (IPAG) to provide an efficient bulk buying service.
So when the next step was taken to strengthen purchasing power and reduce prices by floating a tender for wholesalers to quote on, the management of Pharmacy Alliance was simply doing its job.
Building on a tendering process that had started with generic drugs, was simply a logical next step.

However, API was not in the mood to see, in its view, 16 percent of a market moving out of its control, having already lost 20 percent of a market in directly diverted Pfizer product sales.
As can be readily seen, control of the supply chain means control of sell-in prices and their margins.
Pfizer seriously understood this when it went with direct supply to squeeze every dollar that was available within the supply chain, to offset losses about to be endured through loss of patent protection on some of its original molecules e.g. Lipitor.

Predictably, API erupted and developed a separate offer for each member of the Pharmacy Alliance Group as a strategy to immobilise their control.
API was simply doing its job as well, but was too heavy-handed, leaving itself in a situation with little negotiating advantage.
However, the Pfizer experience had reinforced the feeling of unity that is understood by all pharmacists, irrespective of their existing liaisons.
API only recruited a small percentage of Pharmacy Alliance members who capitulated to a process that was deemed to be “bullying” by Pharmacy Alliance.
Threats have been thrown up by both sides but this is seen as mostly hot air.
Neither side appears to have breached the Trade Practices Act even though tempers have frayed.

That API took such a stance is understandable, given its Pfizer losses documented above.
That forced a complete change within the API business model with the upshot that the loss of gross profit, occasioned by the Pfizer experience, was adjusted on the price of all other products.
This immediately disadvantaged two of the players –pharmacists, who had to pay higher prices for all their wholesaler products with no offset, and manufacturers (other than Pfizer) whose sell-in prices were now comparatively higher across the board, creating a market disadvantage.
It is now inevitable that other manufacturers will follow suit and supply on an independent basis, utilising the Pfizer model.

It is also an imperative that pharmacists must come out fighting, king-hitting any opposition that impedes the goal of supply chain protection and decent profit margins.
Noticable also is that the Pharmacy Guild of Australia (PGA) is almost invisible at a time that is critical to the survival of its members.
PGA members must be wondering who their executive really represents given their passive response to Pfizer, API activity and the so-called "reforms" of the PBS that are stripping the economic life out of pharmacy in rigid out-of-step actions, incompatible with these free enterprise movements.

Wholesalers have always been the traditional power brokers within the Pharmaceutical Industry, but this role is now being taken from them by the manufacturers, and to a lesser extent, pharmacies.

Pharmacies will need to fight to maintain their share of power by utilising a number of strategies:

* Use their professional power to break up the generic market away from Pfizer.

* Make the PGA executive fight on their behalf.

* Develop their own logistics system to control the flow of goods into store. This will need to extend to a nationally networked system of regional bulk-buying groups.

* Extend that logistics system to control the flow of goods and services from the pharmacy to the home and to back a “pharmacy-in-the-home” service.

A pharmacy-in-the-home service represents a value-adding to the drugs supplied by a pharmacy.
It can mean a number of things (Dose Administration Aid systems, Information Systems, Patient Drug Analysis Systems or primary health care services of all descriptions).
Manufacturers will value any supply chain system that beats a direct pathway to a patient, particularly one that can demonstrate an increase in compliance.
This will most likely become the interface boundary where manufacturers will support pharmacy endeavours to give advantage to their specific products.

Manufacturers will tend to buy their way in.
Pfizer is reported to be currently withholding about 5 percent of each pharmacy account to be returned in rebates on their future product sales.
In particular, it will be applied to Lipitor when it comes off patent.

So just analyse that for a moment.
You have immediately paid (up front) a higher price for Pfizer products through their new direct business model. That also represents a considerable cost and a loss of market power by pharmacists.
The virtual 5 percent discount, when applied back to products like Lipitor, will be a temptation for cash-strapped pharmacists. US financial analysts have already predicted that Lipitor will remain in Pfizer’s Top Five Products over the next 5 years because they are betting that pharmacists will  break ranks and not recommend alternate Lipitor generics, to simply regain money that was theirs in the first place.
Pfizer gets to keep its original margins and a higher than anticipated market share for Lipitor (and other products), still maintaining market share and control.
To me, this is an unconscionable action that represents abuse of market power that inflates drug prices and disadvantages the ultimate consumers. It is something that should involve the ACCC.

This type of market control continually beats pharmacists over the head, causing financial damage over time, and may even translate into manufacturers owning their own chains of pharmacies as the ultimate control of the supply chain.
And you thought Coles and Woolworths (and possibly some wholesalers) were the demons in pharmacy ownership!

i2P predictions regarding inevitable supply chain battles were documented over 12 months ago. They seemed improbable then, just as manufacturer owned pharmacies may seem now. You be the judge.

Twelve months ago we also predicted that wholesalers would begin to move in on their client pharmacy traditional service business.
Where else can they go?
Financially they need to recover to become a competitive force and pharmacy services will be a logical process.
Don’t let them achieve this goal!

Mechanisms exist now for pharmacies to become larger scale corporate structures, also to exist as multiple chains. This will only work if the professional side of pharmacy can be kept to a smaller personal scale i.e. an arms-length clinical pharmacy practice that is a contracted entity within that corporate structure.
This is a potential model that could universally satisfy most pharmacist aspirations (including pharmacist prescribing).

Pharmacy Alliance also has another initiative within some of its member pharmacies and that is the nurse practitioner clinic. It only needs to add the pharmacist practitioner clinic to be complete.
Pharmacy Alliance should be supported and congratulated for its efforts in demonstrating leadership in pharmacy and i2P wishes them well in the coming industry battles – and there will be quite a few!

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