Guest post: One of these flawed money-saving approaches

Originally a comment by chrislawson on It’s up to individual pharmacists.

As a fellow of the RACGP, I’m extremely proud that they’ve taken this stand after many years of not addressing it. An observation for those of you outside the medical field or Australia (I don’t know how applicable this is in other countries)…

Most pharmacists I know dislike stocking all the natural remedy stuff. The problem is that, much as I love Australia’s socialised medical system, one of its deep flaws is that governments keep trying to save money in the system where it’s easier to make cuts rather than where it’s sensible to make cuts.

One of these flawed money-saving approaches is that the government has completely gutted the payment pharmacists receive for dispensing prescriptions, so instead the pharmacies make their money off their retail sales — which is why our pharmacies are full of dodgy remedies, perfumes, cosmetics, gifts, etc. Australian pharmacies can only just tick over on the income from doing what they’re supposed to do — that is, give people health advice and dispense prescriptions while performing the essential task of checking that the prescription is correct and safe — and the reason why owning a pharmacy is lucrative is that the prescriptions act like a loss-leader that attracts customers into the shop where money can be made from impulse buys.

The allowed markups for PBS medication (that is, most of the drugs that are prescribed in Australia) run like this:

Up to and including $30.00 15%
Between $30.01 and $45.00 $4.50
Between $45.01 and $180.00 10%
Between $180.01 and $450.00 $18.00
Between $450.01 and $1,750.00 4%
Over $1,750.00 $70.00

For prescriptions the pharmacy also gets a dispensing fee of around $7. So while the pharmacy is earning money from this, it’s hardly lucrative, especially since some drugs require refrigeration or other special storage conditions and all of them require extensive record-keeping and frequent audits. I’m not trying to make pharmacy owners seem like poor downtrodden proles as they earn a pretty good income and the markups listed above may not be generous but aren’t subsistence-level either…but the current funding model encourages retail income over professional service income, and I think that’s a mistake.


  1. says

    I grew up in Australia. I remember the pharmacy, though we called it “the chemist”. Some of the pharmacies called themselves an “apothecary”. And they dispensed prescriptions.

    Then I moved to USA, where they were called drug stores. And what the drug stores mainly did was sell Coca Cola, magazines, candy bars and such like. Filling prescription seemed to be a very minor part of what they did.

  2. Omar Puhleez says

    I have always lived here in Oz. It’s my country. And no matter how hard the chemists try to tart them up, calling them funny names like ‘pharmacies’, a chemist’s shop is still a chemist’s shop.

Leave a Reply

Your email address will not be published. Required fields are marked *