Aussies are sick of paying too much for medicine. Three consumer groups and the Australian Council of Social Service announced yesterday that they are joining forces to launch a new campaign against pricey prescriptions.
More specifically, these groups are urging consumers to support price disclosure, a process that allows the Australian government to benchmark prices against global averages. According to the Consumer Health Forum of Australia’s (CHFA) press release, Australians can pay up to 10 times the British price for medication, and 15% of Aussies currently struggle to cough up funds for their prescriptions.
This latest move comes in opposition to a campaign supported by the Pharmacy Guild that, according to CHFA, is meant to keep profits packed for chemists. While the Guild is requesting $150 million in compensation for costly price disclosures, CHFA Chief Carol Bennett points to billions in government subsidies that pharmacists already receive under the Pharmaceutical Benefits Scheme.
For the Guild’s part, it believes this latest campaign is “quite deliberately” misleading the public and that the groups involved “should be ashamed to put their names to such distortions of the truth and should be condemned for their baseless scare tactics.” The guild denies asking for price disclosure changes, as well as any prescription price hikes.
According to the Guild, its main objective in revising current provisions is to ensure that pharmacists are adequately paid to keep operations sustainable and accessible. More specifically, it warned that 410 single-pharmacy towns could lose their one source of medicine as cash-strapped stores close. As a final note, the Pharmaceutical Guild also disputes CHFA’s Aussie-to-Brit cost comparison, noting that Australia has of the lowest pharmaceutical spends as a percentage of GDP in the world.
Any health care issue packs a hard political punch, and the price of medicine is staunchly stuck between consumer concerns and pharmaceutical interests – both powerful blocs. If price disclosures do continue, companies like Sigma Pharmaceuticals (ASX: SIP), Mayne Pharma (ASX: MYX), and Australian Pharmaceutical Industries (ASX: API) could see squeezed margins. On the other hand, if Bennett’s claim that Aussies are currently choosing between food and prescriptions is true, more affordable medicine could make up in volume sales what it loses in margins.
For long-term investors, picking the best company goes beyond political piddles. Aussies will always need medicine, and the company with the strongest value add will continue to thrive in future years – no matter what we pay our pharmacists.
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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.