Business Irish

Monday 26 September 2016

Commercial winds of change are finally set to blow for doctors and pharmacies

Published 19/05/2016 | 02:30

Pharmacies and GPs could face a radical shake-up in how they do business in this country under a radical plan by a group representing family doctors. Picture posed
Pharmacies and GPs could face a radical shake-up in how they do business in this country under a radical plan by a group representing family doctors. Picture posed

One of my earliest recollections of going to the "chemist" as a kid, was when my mother would send me in to collect a prescription. Invariably, the chemist would read the prescription, tell me it would be about 15 minutes and ask did I have any other jobs to do in the town.

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Given that I was only about 10 years old, I never had any other jobs to do and would just sit there for up to 20 minutes.

The process of dispensing medicine was something of a mystery. Why did it take so long? Could they not read the doctor's writing? I know I couldn't.

Of course there were a few reasons. They had to make sure they didn't get it wrong. They had to make sure the doctor hadn't got it wrong. They had to manage their workload between the two sides of their business - selling toothbrushes and perfume on one hand and dispensing antibiotics and whatever else on the other.

Retail counter staff often didn't want to rush the pharmacist at the back counter so they would always try to buy some time. They still do.

A new plan is being hatched by the National Association of General Practitioners (NAGP) which would see GP practices dispense the medicines themselves. It could do away with the old "anything else to do" line after all these decades. It sounds like a wonderful idea and a great piece of pro-consumer market disruption.

By cutting out the pharmacies, the GPs should be able to offer the medicines at a much cheaper price. Equally, consumers won't have to make that second trip to the pharmacy. This can be particularly awkward for older people.

The NAGP can argue that some rural doctors do this already when patients visit them at night and they need some medication or in home visits in the middle of the night.

The practice already exists in some other countries such as the US where some states allow limited GP dispensing while others have no limits.

Pharmacists are preparing for war and you can imagine the business atmosphere in a small town between the GP practice and the pharmacy if the doctor eats a large slice of the pharmacy's prescription business.

But then again, GPs have seen the pharmacies push for a greater primary care role themselves.

It is only when you look at GP practices and pharmacies as businesses that the complexity of this issue arises.

Three good things about the plan are that: 1. It cuts out a part of the chain seeking a margin. 2. It saves consumers on additional trips. 3. Doctors should be able to sell the drugs much more cheaply because pharmacists appear to make so much money in Ireland. The pharmacists have a few good points to make too. They are a second pair of eyes ensuring the prescription is accurate and suitable. It is often easier to get a pharmacist on the phone when you get home and have a query about the prescription, than it is to get a doctor.

Pharmacists will also argue that it presents a conflict of interest where the professional issuing the prescription is also selling the prescription because it could encourage the doctor to issue too much medication.

In other countries this conflict has been dismissed by some on the grounds that doctors will think about patient health first and not prescribe medicines patients don't need.

There are other complicating factors in all of this. For example, GP practices would have to store a large inventory of medicine. It would have to comply with labelling laws. Doctors dispensing themselves would take too much time so they would need to hire a "pharmacist" to oversee the process.

In truth, the GP dispensing process would be like a standalone business within their practice involving distribution deals, labelling and IT systems, a physical counter for patients to go to and trained staff.

In the US some companies have made a fortune by selling entire mini-pharmacy packages to dispensing GPs which include a counter, storage, IT and inventory management.

All of that costs money. Would the GPs end up sub-contracting the running of that operation within their practice to qualified pharmacists? If that happened, the savings passed on to customers might not be as big in time.

A huge amount of the pharmacists' prescription business is for holders of medical cards, which they argue isn't profitable anyway. This move might put that to the test.

The real problem here that your average consumer has no idea how much money GP practices or pharmacies actually make. Lots of GPs would not sign up to the free under sixes scheme because they said it would leave their practices overrun with parents taking in little Johnny who has a sniffle.

They may even have a point, but at the same time they were turning down a potential wave of "new business". When the economy was collapsing in 2009, prices were falling, wages were falling, incomes were being sliced, GP fees didn't seem to drop.

GPs argued that they lost non-medical card customers handing over cash on the day as more people lost their jobs and qualified for medical cards which are less profitable for medical practitioners.

There are numerous allegations that some GPs have been charging medical card holders €15 for blood tests in contravention of their GMS contracts which stipulate they are covered.

In terms of perceptions, neither doctors nor pharmacies are seen in the "value for money" category. In reality people don't measure them against value for money and consumers rarely try to shop around for medical advice or care. Pharmacists argue their margins have been shot to pieces and their businesses are under pressure. There is no doubt that the industry was super profitable in the past and pharmacists are having to work harder for their profits now.

Some would say it is still a gold mine sector. Shane O'Sullivan, founder of online pharmacy operator Healthwave has argued there is still huge scope for the state to make massive savings on its drug spend.

He wants the state to reform the pharmacy dispensing fee structure removing the per item dispensing fee and replacing it with a "per patient" fee of €10 per month. He also wants to shift the burden of the €2.50 prescription charge from medical card holders to pharmacies.

Traditional pharmacies will argue they have a vital presence in towns and have an even bigger part to play in healthcare by expanding the services they can offer to the state. They want to treat medical card holders for minor ailments instead of the State paying for them to go to GPs for things like dry eyes, dry skin, athlete's foot, cold sores or constipation.

They would also like to expand their role in State vaccinations from flu jabs to other services.

The truth is GPs and pharmacies are businesses. Their business model is incredibly complex partially because in many cases their biggest direct customer is the State.

People outside the industry don't know what to believe when it comes to their profitability. They both have large representative national organisations that can negotiate collectively even though they are individual businesses competing against one another.

Pharmacies want to take on more primary care functions. GPs are now thinking about taking on some of what pharmacies do. There is a case for both doing some of what the other does.

Perhaps the very fact these fault lines are appearing in the health sector shows that commercial pressures are finally going to force change.

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