Medicine margin position confirmed by supply chain report

MEDIA RELEASE

1 December 2016

Guild’s medicine margin position confirmed by supply chain report

The Pharmacy Guild of New Zealand (the Guild) is pleased with the findings of a report analysing the costs of the current pharmaceutical supply chain.

Pharmacy Guild Chief Executive, Andrew Gaudin, says “The analysis presented in the report ‘True costs of the pharmaceutical supply chain’ prepared by Grant Thornton NZ, has confirmed the Guild’s position, and that of our members; that medicine margin funding has not been covering the true cost of the supply chain for the procurement and stockholding of medicine for community pharmacies.

“The report was released by DHB Shared Services on Friday last week. The report is the result of a commitment made by the Canterbury and Nelson-Marlborough DHBs in December last year during the mediation of a dispute that arose when two pharmacies began charging additional fees to cover the full supply chain cost.

“The report estimates that in the 2014/15 year the supply chain was underfunded by between $10 million to $19 million. This is not a fully costed estimate as it does not take into account the costs of packaging materials and handling costs for bulk packs which are a part of supply chain costs.

“It is our expectation that DHBs will now use this analysis to find a long-term sustainable solution to medicine margin funding as part of the next contract. The DHBs made this commitment at the settlement of a medicine margin offer in July 2016.

“In a media release DHB Shared Services suggest there is sufficient funding within professional service fees to offset the medicine margin funding shortfall. We do not believe that there is conclusive evidence to support this and note that the scope of the mediation outcome requirements did not extend to reviewing professional service fees. We are firmly of the view that there is no overfunding of professional service fees which were separately agreed under the CPSA.

“Grant Thornton notes that the economic returns for pharmacies and wholesalers are poor, reducing the likelihood of investment for significant improvement. This means that total funding is insufficient for pharmacy owners to invest in services for their patients. The report also confirms that the current medicine margin funding model has reached the end of its lifespan and that it is up to industry leaders to develop a fit-for-purpose funding model.

“We believe the findings of this report, and previous reports, clearly highlight an issue with current medicine margin funding. We look forward to working with DHBs and other stakeholders to ensure this important issue is addressed and that community pharmacy can operate within a sustainable funding environment, providing professional and valuable health care to New Zealand communities.”

Please find links to the report and DHB media statement below.

Link to report: http://centraltas.co.nz/assets/Publications/Pharmacy-Documents/Pharmaceutical-Margins/grant-thornton/GTNZ-R-TAS-True-Costs-of-the-Pharmaceutical-Supply-Chain-v03.3-dated-17.11.2016.pdf

Link to media statement: http://centraltas.co.nz/assets/Publications/Pharmacy-Documents/Pharmaceutical-Margins/grant-thornton/CPS0404Pharm.Margins-Statement-TReport20161122.pdf

ENDS

Notes:

• The Pharmacy Guild of New Zealand (Inc) is a national membership organisation representing community pharmacy owners. We provide leadership on all issues affecting members and advocate for the business and professional interests of members.

• For additional information on the Guild and community pharmacy, visit www.pgnz.org.nz.

© Scoop Media