s Pharmedia: Escalating Bankruptcies Have an Underlying Cause | I2P: Information to Pharmacists - Archive
Publication Date 01/07/2014         Volume. 6 No. 6   
Information to Pharmacists

Editorial

From the desk of the editor

Welcome to the July 2014 homepage edition of i2P (Information to Pharmacists) E-Magazine.
At the commencement of 2014 i2P focused on the need for the entire profession of pharmacy and its associated industry supports to undergo a renewal and regeneration.
We are now half-way through this year and it is quite apparent that pharmacy leaders do not yet have a cohesive and clear sense of direction.
Maybe the new initiative by Woolworths to deliver clinical service through young pharmacists and nurses may sharpen their focus.
If not, community pharmacy can look forward to losing a substantial and profitable market share of the clinical services market.
Who would you blame when that happens?
But I have to admit there is some effort, even though the results are but meagre.
In this edition of i2P we focus on the need for research about community pharmacy, the lack of activity from practicing pharmacists and when some research is delivered, a disconnect appears in its interpretation and implementation.

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News Flash

Newsflash Updates for July 2014

Newsflash Updates

Regular weekly updates that supplement the regular monthly homepage edition of i2P. 
Access and click on the title links that are illustrated

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Feature Contribution

Woolworths Pharmacy - Getting One Stage Closer

Neil Johnston

It started with “tablet” computers deployed on shelves inside the retailer Coles, specifically to provide information to consumers relating to pain management and the sale of strong analgesics.
This development was reported in i2P under the title Coles Pharmacy Expansion and the Arid PGA Landscape”
In that article we reported that qualified information was a missing link that had come out of Coles market research as the reason to why it had not succeeded in dominating the pain market.
Of course, Woolworths was working on the same problem at the same time and had come up with a better solution - real people with good information.

Comments: 5

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Intensive Exposition without crossing over with a supermarket

Fiona Sartoretto Verna AIAPP

Editor's Note: The understanding of a pharmacy's presentation through the research that goes into the design of fixtures and fittings that highlight displays, is a never-ending component of pharmacy marketing.
Over the past decade, Australian pharmacy shop presentations have fallen behind in standards of excellence.
It does not take rocket science - you just have to open your eyes.
Recently, our two major supermarkets, Woolworths and Coles, have entered into the field of drug and condition information provision - right into the heartland of Australian Pharmacy.

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The sure way to drive business away

Gerald Quigley

I attended the Pregnancy, Baby and Children’s Expo in Brisbane recently.
What an eye and ear opening event that was!
Young Mums, mature Mums, partners of all ages, grandparents and friends……...many asking about health issues and seeking reassurances that they were doing the right thing.

Comments: 1

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‘Marketing Based Medicine’ – how bad is it?

Baz Bardoe

It should be the scandal of the century.
It potentially affects the health of almost everyone.
Healthcare providers and consumers alike should be up in arms. But apart from coverage in a few credible news sources the problem of ‘Marketing Based Medicine,’ as psychiatrist Dr Peter Parry terms it, hasn’t as yet generated the kind of universal outrage one might expect.

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Community Pharmacy Research - Are You Involved?

Mark Coleman

Government funding is always scarce and restricted.
If you are ever going to be a recipient of government funds you will need to fortify any application with evidence.
From a government perspective, this minimises risk.
I must admit that while I see evidence of research projects being managed by the PGA, I rarely see community pharmacists individually and actively engaged in the type of research that would further their own aims and objectives (and survival).

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Organisational Amnesia and the Lack of a Curator Inhibits Cultural Progress

Neil Johnston

Most of us leave a tremendous impact on pharmacies we work for (as proprietors, managers, contractors or employees)—in ways we’re not even aware of.
But organisational memories are often all too short, and without a central way to record that impact and capture the knowledge and individual contributions, they become lost to time.
It is ironic that technology has provided us with phenomenal tools for communication and connection, but much of it has also sped up our work lives and made knowledge and memory at work much more ephemeral.

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Academics on the payroll: the advertising you don't see

Staff Writer

This article was first published in The Conversation and was written by Wendy Lipworth, University of Sydney and Ian Kerridge, University of Sydney
In the endless drive to get people’s attention, advertising is going ‘native’, creeping in to places formerly reserved for editorial content. In this Native Advertising series we find out what it looks like, if readers can tell the difference, and more importantly, whether they care.
i2P has republished the article as it supports our own independent and ongoing investigations on how drug companies are involved in marketing-based medicine rather than evidence-based medicine.

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I’ve been thinking about admitting wrong.

Mark Neuenschwander

Editor's Note: This is an early article by Mark Neuenschwander we have republished after the soul-searching surrounding a recent Australian dispensing error involving methotrexate.
Hmm. There’s more than one way you could take that, huh? Like Someday when I get around to it (I’m not sure) I may admit that I was wrong about something. Actually, I’ve been thinking about the concept of admitting wrong. So don’t get your hopes up. No juicy confessions this month except that I wish it were easier for me to admit when I have been wrong or made a mistake.
Brian Goldman, an ER physician from Toronto, is host of the award-winning White Coat, Black Art on CBC Radio and slated to deliver the keynote at The unSUMMIT for Bedside Barcoding in Anaheim this May. His TED lecture, entitled, “Doctors make mistakes. Can we talk about it?” had already been viewed by 386,072 others before I watched it last week.

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Dispensing errors – a ripple effect of damage

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

Most readers will be aware of recent publicity relating to dispensing errors and in particular to deaths caused by methotrexate being incorrectly packed in dose administration aids.
The Pharmacy Board of Australia (PBA), in its Communique of 13 June 2014, described a methotrexate packing error leading to the death of a patient and noted “extra vigilance is required to be exercised by pharmacists with these drugs”.
This same case was reported by A Current Affair (ACA) in its program on Friday 20 June
http://aca.ninemsn.com.au/article/8863098/prescription-drug-warning

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Take a vacation from your vocation

Harvey Mackay

Have you ever had one of those days when all you could think was, “Gosh, do I need a vacation.”
Of course you have – because all work and no play aren’t good for anyone.
A vacation doesn’t have to be two weeks on a tropical island, or even a long weekend at the beach. 
A vacation just means taking a break from your everyday activities. 
A change of pace. 
It doesn’t matter where.
Everyone needs a vacation to rejuvenate mentally and physically. 
But did you also know that you can help boost our economy by taking some days off? 
Call it your personal stimulus package.

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Explainer: what is peer review?

Staff Writer

This article was first published in the Conversation. It caught our eye because "peer review" it is one of the standards for evidence-based medicines that has also been corrupted by global pharma.
The article is republished by i2P as part of its ongoing investigation into scientific fraud and was writtenby Andre Spicer, City University London and Thomas Roulet, University of Oxford
We’ve all heard the phrase “peer review” as giving credence to research and scholarly papers, but what does it actually mean?
How does it work?
Peer review is one of the gold standards of science. It’s a process where scientists (“peers”) evaluate the quality of other scientists' work. By doing this, they aim to ensure the work is rigorous, coherent, uses past research and adds to what we already knew.
Most scientific journals, conferences and grant applications have some sort of peer review system. In most cases it is “double blind” peer review. This means evaluators do not know the author(s), and the author(s) do not know the identity of the evaluators.
The intention behind this system is to ensure evaluation is not biased.
The more prestigious the journal, conference, or grant, the more demanding will be the review process, and the more likely the rejection. This prestige is why these papers tend to be more read and more cited.

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Dentists from the dark side?

Loretta Marron OAM BSc

While dining out with an elderly friend, I noticed that he kept his false tooth plate in his shirt pocket. He had recently had seven amalgam-filled teeth removed, because he believed that their toxins were making him sick; but his new plate was uncomfortable. He had been treated by an 'holistic dentist'. Claiming to offer a "safe and healthier alternative" to conventional dentistry, are they committed to our overall health and wellbeing or are they promoting unjustified fear, unnecessarily extracting teeth and wasting our money?

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Planning for Profit in 2015 – Your key to Business Success

Chris Foster

We are now entering a new financial year and it’s a great time to reflect on last year and highlight those things that went well and those that may have impacted negatively in the pursuit of your goals.
It's also a great to spend some time re-evaluating your personal and business short, medium and long term goals in the light of events over the last year.
The achievement of your goals will in many cases be dependent on setting and aspiring to specific financial targets. It's important that recognise that many of your personal goals will require you to generate sufficient business profits to fund those aspirations

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ReWalk™ Personal Exoskeleton System Cleared by FDA for Home Use

Staff Writer

Exoskeleton leader ReWalk Robotics announced today that the U.S. Food and Drug Administration has cleared the company’s ReWalk Personal System for use at home and in the community.
ReWalk is a wearable robotic exoskeleton that provides powered hip and knee motion to enable individuals with Spinal Cord Injury (SCI) to stand upright and walk.
ReWalk, the only exoskeleton with FDA clearance via clinical studies and extensive performance testing for personal use, is now available throughout the United States.

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Attracting and Retaining Great People

Barry Urquhart

Welcome to the new financial year in Australia.
For many in business the past year has been described as a challenging period.
Adjectives are a key feature of the English language.  In the business lexicon their use can be, and often is evocative and stimulate creative images.  But they can also contribute to inexact, emotional perceptions.
Throughout the financial pages of newspapers and business magazines adjectives abound.
References to “hot” money draw attention and comment.  The recent wave of funds from Chinese investors, keen to remove their wealth from the jurisdiction and control of government regulations is creating a potential property bubble in Australia.

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Updating Your Values - Extending Your Culture

Neil Johnston

Pharmacy culture is dormant.
Being comprised of values, unless each value is continually addressed, updated or deleted, entire organisations can stagnate (or entire professions such as the pharmacy profession).
Good values offer a strong sense of security, knowing that if you operate within the boundaries of your values, you will succeed in your endeavours.

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Evidence-based medicine is broken. Why we need data and technology to fix it

Staff Writer

The following article is reprinted from The Conversation and forms up part of our library collection on evidence-based medicines.
At i2P we also believe that the current model of evidence is so fractured it will never be able to be repaired.
All that can happen is that health professionals should independently test and verify through their own investigations what evidence exists to prescribe a medicine of any potency.
Health professionals that have patients (such as pharmacists) are ideally placed to observe and record the efficacy for medicines.
All else should confine their criticisms to their evidence of the actual evidence published.
If there are holes in it then share that evidence with the rest of the world.
Otherwise, do not be in such a hurry to criticise professions that have good experience and judgement to make a good choice on behalf of their patients, simply because good evidence has not caught up with reality.

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Laropiprant is the Bad One; Niacin is/was/will always be the Good One

Staff Writer

Orthomolecular Medicine News Service, July 25, 2014
Laropiprant is the Bad One; Niacin is/was/will always be the Good One
by W. Todd Penberthy, PhD

(OMNS July 25, 2014) Niacin has been used for over 60 years in tens of thousands of patients with tremendously favorable therapeutic benefit (Carlson 2005).
In the first-person NY Times best seller, "8 Weeks to a Cure for Cholesterol," the author describes his journey from being a walking heart attack time bomb to a becoming a healthy individual.
He hails high-dose niacin as the one treatment that did more to correct his poor lipid profile than any other (Kowalski 2001).

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Culture Drive & Pharmacy Renewal

Neil Johnston

Deep within all of us we have a core set of values and beliefs that create the standards of behaviour that we align with when we set a particular direction in life.
Directions may change many times over a lifetime, but with life experiences and maturity values may increase in number or gain greater depth.
All of this is embraced under one word – “culture”.
When a business is born it will only develop if it has a sound culture, and the values that comprise that culture are initially inherent in the business founder.
A sound business culture equates to a successful business and that success is often expressed in the term “goodwill” which can be eventually translated to a dollar value.

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ReWalk™ Personal Exoskeleton System Cleared by FDA for Home Use

Staff Writer

Exoskeleton leader ReWalk Robotics announced today that the U.S. Food and Drug Administration has cleared the company’s ReWalk Personal System for use at home and in the community.
ReWalk is a wearable robotic exoskeleton that provides powered hip and knee motion to enable individuals with Spinal Cord Injury (SCI) to stand upright and walk.
ReWalk, the only exoskeleton with FDA clearance via clinical studies and extensive performance testing for personal use, is now available throughout the United States.

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Pharmacy 2014 - Pharmacy Management Conference

Neil Johnston

The brave new world of health and wellness is not the enemy of Pharmacy, it is its champion.
Australian futurist, Morris Miselowski, one of the world's leading business visionaries, will present the Opening Keynote address on Pharmacy's Future in the new Health and Wellness Landscape at 2.00pm on Wednesday July 30.
Morris believes the key to better health care could already be in your pocket, with doctors soon set to prescribe iPhone apps, instead of pills.
Technology will revolutionise the health industry - a paradigm shift from healthcare to personal wellness.
Health and wellness applications on smartphones are already big news, and are dramatically changing the way we manage our personal health and everyday wellness.

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Generation and Application of Community Pharmacy Research

Neil Johnston

Editor’s Note: We have had a number of articles in this issue relating to pharmacy research.
The PGA has conducted a number of research initiatives over the years, including one recently reported in Pharmacy News that resulted from an analysis of the QCPP Patient Questionnaire.
Pharmacy Guild president, George Tambassis, appears to have authored the article following, and there also appears to be a disconnect between the survey report and its target audience illustrated by one of the respondent comments published.
I have asked Mark Coleman to follow through, elaborate and comment:

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Pharmedia: Escalating Bankruptcies Have an Underlying Cause

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.

Editor's Note: I feel no pride in reporting the escalating number of bankruptcies in Australian pharmacy, but the latest high profile group to bite the dust is significant.
There is no doubt that the business side of pharmacy is hurting…badly.
There is little publicity surrounding pharmacy closures and bankruptcies, and really, when it comes down to it, there is little help.
There are many complex reasons as to how pharmacy owners get themselves into this situation, some because of poor individual management control, others from industry influence beyond their control.

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I have asked Mark Coleman to comment as to why this is happening and what can be done – because there are more bankruptcies to come on stream in the near future.

i2P was the first publication to report this phenomenon, and we are probably first to report that it is a whole of industry mess.
We also have to point that poor policies and poor leadership are the underlying causes..
Mark’s comments appear below the media item.

Pharmacy News
24 September, 2012

Trading terms blamed for Pulse collapse

The founder of the Pulse Pharmacy franchise is blaming Sigma Pharmaceuticals for the chain's collapse, claiming the wholesaler reduced his trading terms from 120 to 30 days, while Chemist Warehouse continued to receive 120-day trading terms.  
Rohan Aujard said his two largest creditors, National Australia Bank (Nab) and Sigma had stymied attempts to salvage the business, which had an annual turnover of more than $300 million.

As reported in The Australian, Mr Aujard was forced to file for bankruptcy on 19 September, after creditors voted down a proposal that would have returned just four cents in the dollar.

The pharmacist-turned-entrepreneur sent an email to dozens of industry contacts blaming Sigma for the collapse, saying he experienced significant cash flow problems when the wholesaler reduced his trading terms from 120 to 90 days and, eventually, 30 days.
Mr Aujard also claimed that Chemist Warehouse continued to be offered 120-day trading terms by Sigma.
A spokesperson for Sigma defended the company’s handling of the situation. 

“When the Pulse group’s terms were being pulled back, we treated them in exactly the same way we treated all our customers,” she said. “It happened right across our customer base,” he told The Australian. |
Mr Aujard also criticised NAB which he said “wooed us relentlessly” and had “given us $200m in debt,” only to later withdraw its support.
However, the NAB spokesperson said the bank had been working with Pulse Pharmacy for several years in a bid to find a resolution to the company’s financial difficulties.
Several businesses associated with the Pulse Pharmacy chain were placed in receivership last November and December, owing $72m – approximately $45m to NAB, $16m to Sigma and the remainder to other non-secured creditors.

Mr Aujard, who also incurred debts personally by providing a personal guarantee, had offered a deal that would see him pay $500,000 to extinguish the multi-million-dollar liability.

However, both Sigma and NAB voted against the deal, despite insolvency trustee James Downey of JP Downey and Co advising that it offered the best chance for a return. 

Mark Coleman
The traditional form of funding a new pharmacy or pharmacy expansion has been to obtain a guarantee from a wholesaler and use that as security with a bank of your choice.
For many years it was regarded as a rock-solid commercial partnership between a wholesaler and a community pharmacy with the banks considering they had little to lose.
The real power brokers in pharmacy always have been the wholesalers, and to fall foul of any major wholesaler meant that you had a real problem on your hands-the industry has always been controlled by a tight-knit group of individuals in wholesaler organisations.
The balance of power has been upset in recent times by manufacturers such as Pfizer, who have elected to deal on a direct basis with community pharmacists, cutting out the wholesaler completely. With rumors that other manufacturers will join Pfizer, wholesalers are scrambling for an "edge".
With pharmacy at a weak point, guess whose turf will be invaded?

Anyone who has ever been involved in this traditional form of funding, and has failed to sustain a relationship with their guarantor, suddenly finds they have lost control of some of the strategic decision-making within their own business.
For example, your bank manager, under the terms of the guarantee begins to hold regular telephone meetings with your wholesaler and will disclose what would normally be considered confidential information. This includes whatever local information can be garnered such as promotional activity or pursuits that the wholesaler might not look on favourably e.g. investment in other local businesses.

When I first went into business I found a variety of mentors- these people are extremely valuable assets and they should find themselves on a frequent contact list for future access.

My first mentor delivered a simple message – “keep profitable and keep liquid”.

He taught me a simple cash management plan by investing cash flow surpluses over the month into a money market account at call.
When a core volume was established, that value was converted to a fixed-term investment account, to further create a permanent “buffer”, only retrievable in emergencies or for capital expenditure.
Part of my capital budget became how many $10,000 deposits I could create over a year.
Buffers are psychologically hard to spend and you find yourself having to justify each spend when you decide to remove a buffer.

My second mentor came along in the form of an agent for the MLC insurance company as I was taking out life insurance as part of my plan to get married and have a family. In various discussions he advised me that periodically, I should take out small loans with various financial institutions whether I needed the money or not.
This sounded strange at the time but he went on to explain that it was a simple way of establishing a credit rating and he further commented “banks only seem to want to lend you money when you don’t need it”.

All this was initially peculiar to me, but many times over my life I have found those words ringing in my ears.

Pharmacists who do not incorporate at the inception of their business commencement leave themselves open to a range of liabilities. While major loans usually have to be supported with director or shareholder guarantees, general trading and lesser forms of financing may not.
Even some forms of leasing may escape a personal guarantee.
The mix becomes more complex when more than one person is involved in the capital structure of the business and director/shareholder agreements should be structured in advance of any future problems, clearly setting out the intent and obligations of the parties involved.

As my mentor sagely observed :”Getting into business is much easier than getting out. Always plan your business as if it were to go bankrupt tomorrow and diligently find out all the processes and alternatives involved, then document a contingency plan. You may never need it, but knowing what options you have and what pitfalls to avoid, improves your survival rate.”
In other words set up lines of credit, sometimes years in advance of actual need.

Note that Pulse pharmacies relied on extended supplier credit as working capital.
This is never a good method of funding your business on a permanent basis, for the very reason that it leaves you vulnerable.
Your entire business is at risk if trading terms are abruptly altered and you have no option but comply or be sued (and bankrupted).
The lesson here is that you should always have liquidity buffers like those mentioned above, and they must not be exceeded by extended credit levels on offer.
This way the good times get you through the bad times.
The owner of Pulse also claimed that one of his opposition, Chemist Warehouse, continued to receive 120 day terms after his terms were reduced.
This may indeed be true, nobody would really have that insider knowledge to any great extent.
When I observed that process occurring with some of my colleagues, inevitably the wholesaler formed up two accounts – one for general trading and the second (representing the original account) was frozen, with a fixed amount being agreed upon as a monthly repayment.
That way the wholesaler can say their general trading accounts are all equal.
I suspect an arrangement of this type may have already been in place for Chemist Warehouse accounts when Sigma had to review its terms a little while back.
That is only speculation on my part.
I have also observed pharmacy wholesalers discriminating against competing clients under liquidity stress and deciding which client they will save.
The saved client is not necessarily the stronger client financially, but has better connections. The saved client may have also been more proactive and developed up a scheme of arrangement that was accepted.

However, there is still one organisation not being held to account in the wash-up of the Pulse pharmacy management group, and that is the Pharmacy Guild of Australia.
Only now is it apparent what the PGA signed community pharmacy up to with various PBS reforms.
It’s obsession with power and manipulation is a mirror image of current federal politics – and we have all had enough!

* Price cuts of PBS drugs to such an extraordinary extent are difficult to manage in an economic climate of recession, and with more to come.
What business do you know of has to balance its numbers with little prospect of growth.

* No opposition to Pfizer style direct dealing. There are two other manufacturer groups intending to go direct. This does not help pharmacy patient goodwill nor does it help wholesalers survive and support stable finance guarantees.
What it does do is set up wholesalers to actively compete against their clients (pharmacies) in clinical services under their own “brand”. Where will say, the current vaccination clinics promoted by Priceline take pharmacy?
Further down the plug-hole because pharmacies do not own the brand and are not doing anything about addressing the problem.

* No offset strategy.
Since 1978 when the PGA announced that it would promote three types of pharmacy models, it left one off – the clinical model.
Nor does there seem to be any rational strategy to bring one on currently.
Clinical service income streams were meant to offset PBS reforms and it hasn’t happened.
The PGA deserves condemnation in the strongest form because it has even gone out of its way to stifle new and different initiatives unless they were completely tied to a pharmacy financially.
The profession of pharmacy suffers with an oversupply of newly graduating pharmacists coupled with bankrupt pharmacists who were unable to sustain the onslaught of PBS “reforms”.

* We now see S2 and S3 Poisons Schedules being threatened on the claim that pharmacists are not value-adding to the drugs in these schedules, and both schedules may be lost to supermarkets.
You can see the hand of greed behind that decision as supermarket and manufacturer lobbyists succeed in influencing legislators in this fashion.
Where is the PGA defence?
There does not even seem to be a defence planned for the recent cough mixture changes – a situation where pharmacy ought to have been able to celebrate a success story.
US supermarkets triggered off the problem with child deaths occurring through unsupervised selling of  S3-type products.
Then Australia harmonised with the FDA in America and restricted Australian sales to children over the age of two- even though there were no known problems recorded in Australia. Indeed an S3 success story through the prevention of death.
Now we are harmonising with New Zealand restrictions with pharmacists now only able to sell to children over six years of age.
Not that there is anything to indicate that these products are in any way being misused and patients being damaged. Only the possibility that they may. How pathetic.
But wait, there’s more.
Australian supermarkets can discount these products to clear stock with impunity until labelling changes become effective, but pharmacies are not able to do anything remotely similar.
Not that you would want to but you don't wish to be publicly humiliated on price without a defence!

The PGA has publicly stated that it will opt out of any fight with the TGA.
These leaders lost their way a long time ago – let’s get rid of them now!

* PGA executive conflict of interest.
There are a number of recorded conflicts where a PGA executive member has discriminated against an ordinary member for financial gain.

Unfortunately, unless there is some serious reform shortly and the conflict of ingterest resolved within the PGA, we may see the entire structure fall over.
This is quite possible and may be necessary before pharmacy can get back on track.
Whenever that may be.

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