# Pharmacies - Price competition - Why is there none?



## gearoid

Hi,

I've just read the Irish Pharmaceutical Unions threat of job losses in pharmacies.

To me, a reduction in the price of basic drugs, prescriptions etc. would reduce our inflation, make us more competitive and give us a better standard of living.

Why do we have to put up with this sort of anti-competitive nonsense from the IPU?

I'm sick of picking up medicines in pharmacies with Greek or Italian prices stickers underneath the Irish one for often 20%-40% of the Irish price.

One example. I picked up a cream thats on prescription here in a 30g tube for about 27 euros. In Spain this is 10.40 euros and available over the counter. In Ireland the same cream is branded differently and available OTC for 8 or 9 euros in 7.5g quantities. This equates to four times the price.

It would seem the IPU has fought every competitive practice and the government hasn't put up much fight for the consumer. In the 1980s there was the absurd limit on the number of places in university pharmacy departments and the clamour for special interviews for certain professions so that their children could get in. In the 90s and 00's we had the fight to stop allowing foreign pharmacists to practice. Now we have the fixed prices for drugs which are ludicrous.

Why cant we have open price competition for common medicines? 

GIVE ANTI-COMPETITIVE PRACTICES THE BOOT!

Gearoid.


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## Purple

I agree completely. The supernormal profits made by pharmacies are obscene.
I know of one pharmacy in Dublin which employs 8 people (none of them work a full week, at most they do 32 hours) and the owner draws €40’000 per month basic salary.


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## Complainer

I've managed to cut the cost of my prescription meds in half - See [broken link removed]


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## kirvos

Above posts explain why pharmacies in recent years have sold for €3m a pop


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## mcaul

Here's a short report made by forfas in 2004

http://www.nca.ie/eng/Research_Zone/Reports/pharmaceuticals_and_consumers.pdf

Confirms Ireland is one of the more expensive countires for medicine, however you also need to take into account that if monthly prescriptions are over €100 you are refunded the cost over this. Also, nearly all over 70's get all their prescription medicine free.

Overall, those of us who only need periodic low price medicine pay more than other countries (don't forget all costs are tax deductible!!) whereas those of us that need high priced drugs are probably better off than other countires.

Margins on medicines is 33% for retailers & 15% for wholesalers.


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## Complainer

mcaul said:


> Confirms Ireland is one of the more expensive countires for medicine, however you also need to take into account that if monthly prescriptions are over €100 you are refunded the cost over this. Also, nearly all over 70's get all their prescription medicine free.
> 
> Overall, those of us who only need periodic low price medicine pay more than other countries (don't forget all costs are tax deductible!!) whereas those of us that need high priced drugs are probably better off than other countires.


This looks like a pharmacists POV. Your points about the refunds over €100, free for over 70's and tax deductibles are all correct - but you forget to mention that these are real costs going from the state into the pharmacists pocket. The patient may not pay, but the pharmacist gets the money either way.


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## Smashbox

If I have a script for something that cost say €10, and its available OTC at say €7, the pharmacist will always tell me and says that it'd be cheaper not to use the Prescription.


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## Complainer

Smashbox said:


> If I have a script for something that cost say €10, and its available OTC at say €7, the pharmacist will always tell me and says that it'd be cheaper not to use the Prescription.


If you have a script for 75mg uncoated aspirin, which costs about €6 for 1 month's supply, does he tell you to get someone to pick up a bottle in the States for about $2 for six months supply?


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## csirl

Pharmacists are running an uncompetitive restrictive monopoly - this is what the disputes in the papers are all about.

Pharmacists think that having a pharmacy degree automatically entitles them to be well paid business operators who own their own shops. I personally dont see the reason the system equates having a pharmacy degree and running a business - they are both very different skill sets. 

If it werent for the restrictions, then every supermarket would have a pharmacy counter maned by PAYE pharmacists dispensing medicines at a fraction of the cost of standalone pharmacies. PAYE pharmacists would probably be paid the going rate for a professional with a degree which would be above the average wage, but not as much as the 100,000s or even 1,000,000s that can be made in the current monopoly.


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## Protocol

Factory gate prices set by Govt in negotiation with manufacturers.

Govt allow a 17.64% wholesale margin to the 3 wholesalers and reimburse the pharmacy 117.64 for every 100 euro drugs.

Wholesalers can't compete on price, so give rebates/discounts out of the 17.64% back to the pharmacy.

Pharmacy then adds 50% retail margin for the DPS scheme.

No retail margin on the medical card.

Also a fee for each dispense, approx. 3.50-5.00.


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## Protocol

Govt plans:

1) Reduce the factor gate prices - DONE

2) Reduce the reimbursement rate to 8% or 9%, i.e. give the pharmacy 108 for every 100 euro of drugs, meaning a lower wholesale margin.

They tried this last year, pharmacies went to court for breach of contract.

3) Change the retail margin and fee structure - IN THE NEWS TODAY.


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## Protocol

http://www.ncpe.ie/

Here is an agreement between the HSE and the manufacturers:

[broken link removed]


A HSE presentation on reducing drug costs:

[broken link removed]


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## conor

Not quite. Factory gate prices agreed between IPHA and Government at higher levels than Spain or Greece due to some derogation they get because of lack of intellectual property rights. Wholesalers sell to pharmacies at 17.66% mark-up. Pharmacies negotiate a discount with wholesalers for early payment, electronic ordering. Margin on DPS 33.33% (mark-up 50%) , GMS 0% + dispensing fee. While there is an argument for some rebalancing and reductions the current cuts going to come in will be catastrophic and will result in many, many pharmacies failing and falling service levels. A pharmacist.


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## samanthajane

Good question it's something that i have never even thought about. I suppose if your ill and need medicine you just go to the nearest place. 

My daughter had to go to the doctor last week, doctor was 60 euro and the medicine was 33 euro. The last thing on my mind was where am i going to get these for the cheapest price. Thats why they dont need to be competative, they dont need to be, people have and will always pay. It wouldn't of mattered if the pharmacy wanted to charge me 200 euro i still would of paid it. 

Is it legal to bring back medicines from foreign countries? When ever i go away i always bring back what ever i can to fill the cupboards, such as asprin, cough medine, creams for burns ect ect. Is there a certain limit your allowed to bring back. 
What about ordering them online? I dont mean from just anywhere but from a pharmacy, are you allowed to do that. Of course if you could wait for it to arrive. 

It's very likely that by daughter will need another prescription to fully clear up her infection, too late to do it now but if you knew you needed it in the next week or so is there anything stopping you from ordering it elsewhere and having it posted out to you?


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## Smashbox

Complainer said:


> If you have a script for 75mg uncoated aspirin, which costs about €6 for 1 month's supply, does he tell you to get someone to pick up a bottle in the States for about $2 for six months supply?


 
No, because I dont get to travel to America every week


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## Complainer

Smashbox said:


> No, because I dont get to travel to America every week


But you do know of someone in your circle of family and friends travelling over the next six months?


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## outperform

Complainer said:


> If you have a script for 75mg uncoated aspirin, which costs about €6 for 1 month's supply, does he tell you to get someone to pick up a bottle in the States for about $2 for six months supply?



Hi complainer. As a pharmacist, I used to sell aspirin 75mg over the counter without a prescription, which is cheaper (currently!) than dispensing it. However, the Irish Medicines Board (not to be messed with!) changed the regulations to make this illegal, and it can now only be bought with a prescription. The reason for this is that anyone who takes this medicine is on it to reduce their platelet count, i.e. thin their blood in order to reduce the possibility of clots occurring which could lead to strokes, heart attacks, deep vein thromboses etcetera. The 75mg dose isn't strong enough for pain relief, and is also coated to reduce potential stomach upset. Therefore, the logic is - anyone who is on this seemingly simple and old-fashioned medication should be on it for a very good reason and not just because they feel like it. Therefore, the IMB feel it should only be dispensed on prescription in to encourage patients who use it to get a check-up from their GP or cardiologist or whoever (in real life - not online!) every 6 months.

If, however somebody comes into my shop and is vocal and irritating enough about the price of the aspirin - I'll sell it to them for a quiet life. They are adults after all - and I'll explain the logic of not selling it without prescription - but they probably won't listen.


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## outperform

gearoid said:


> Hi,
> 
> I've just read the Irish Pharmaceutical Unions threat of job losses in pharmacies.



You probably read about the brutal cuts being imposed too then:_The following are the precise measures the Minister has decided:_


_(a) re-balance the amounts paid in respect of, on the one hand, the       GMS and, on the other hand, the Drugs Payments Scheme, Long Term Illness       Scheme and other community drugs schemes, by: _
_(i) introducing a new higher dispensing fee structure for the           schemes based on a sliding scale as follows: €5 for first 20,000           items, €4.50 for next 10,000 items and €3.50 for the remaining           items; and _

_(ii) reducing from 50% to 20% the retail mark-up payable under           the community drugs schemes (no mark-up is payable under the GMS);           __In these two measures, the Minister is responding to concerns           expressed by pharmacists that medical card dispensing is           cross-subsidised by the retail mark-ups on the other schemes. This           should benefit pharmacies with relatively more medical card           patients, for example, those serving poorer areas. _

 

_(b) end a special payment to pharmacists in relation to the       automatic entitlement of persons over 70 to a medical card, as that       entitlement has been ended; and_
 

_(c) reduce the ‘wholesale mark-up’ reimbursement price paid for       delivery of drugs to community pharmacies, from 17.66% to 10%. This       mark-up was intended to pay for wholesale distribution costs but it is       almost double the European average for this type of service.       Approximately half of this mark-up is being passed back by wholesalers       to pharmacists by way of discounts. _
 _The measures will be given effect through Regulations to be issued by     the Minister in due course. It is intended to implement them with effect     from 1 July._

 5,000 jobs isn't a _threat_, its an unavoidable conclusion.


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## Fatphrog

csirl said:


> If it werent for the restrictions, then every supermarket would have a pharmacy counter maned by PAYE pharmacists dispensing medicines at a fraction of the cost of standalone pharmacies. PAYE pharmacists would probably be paid the going rate for a professional with a degree which would be above the average wage, but not as much as the 100,000s or even 1,000,000s that can be made in the current monopoly.



What restrictions?


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## Smashbox

Complainer said:


> But you do know of someone in your circle of family and friends travelling over the next six months?


 
No, I don't.


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## gearoid

outperform said:


> brutal cuts ...
> 
> 5,000 jobs isn't a _threat_, its an _unavoidable conclusion._



Why should the state pay enormous sums and make massive subventions to enable a small coterie of people make massive profits? Because the government has been weak, and the pharmaceutical lobby has been strong. Fostering internal competition will strengthen the country and save people money. The over-emotive guff from the pharmaceutical lobby should be resisted.

Labelling cuts in a _GUARANTEED 50% mark-up_ as brutal is quite frankly bizarre! Why should there be any guaranteed mark-up?

This is a cosy sector that needs to be forced to compete openly. 

Special interests groups in Ireland such as the pharmaceutical lobby need to be faced-down forcibly to reduce the taxation burden on those of us who actually have to compete in an open market with no guaranteed tax paid lolly.

Now I'm off to pay 4.56 for some eye-drops which should cost about 1.50 if there was proper competition.


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## Complainer

Smashbox said:


> No, I don't.


You need to get out more.


outperform said:


> Hi complainer. As a pharmacist, I used to sell aspirin 75mg over the counter without a prescription, which is cheaper (currently!) than dispensing it. However, the Irish Medicines Board (not to be messed with!) changed the regulations to make this illegal, and it can now only be bought with a prescription. The reason for this is that anyone who takes this medicine is on it to reduce their platelet count, i.e. thin their blood in order to reduce the possibility of clots occurring which could lead to strokes, heart attacks, deep vein thromboses etcetera. The 75mg dose isn't strong enough for pain relief, and is also coated to reduce potential stomach upset. Therefore, the logic is - anyone who is on this seemingly simple and old-fashioned medication should be on it for a very good reason and not just because they feel like it. Therefore, the IMB feel it should only be dispensed on prescription in to encourage patients who use it to get a check-up from their GP or cardiologist or whoever (in real life - not online!) every 6 months.
> 
> If, however somebody comes into my shop and is vocal and irritating enough about the price of the aspirin - I'll sell it to them for a quiet life. They are adults after all - and I'll explain the logic of not selling it without prescription - but they probably won't listen.


Thanks for the explanation, which is more than I got from my pharmacy, despite me being quite vocal and irritating. How does your OTC price compare to the US OTC price? Is Ireland the only country to go prescription only for aspirin? 


samanthajane said:


> Good question it's something that i have never even thought about. I suppose if your ill and need medicine you just go to the nearest place.


Many people are on ongoing prescriptions. I'll probably be on medication for blood pressure for the rest of my life, so I have lots of time to shop around. 


outperform said:


> You probably read about the brutal cuts being imposed too then:_The following are the precise measures the Minister has decided:_
> 
> 
> _(a) re-balance the amounts paid in respect of, on the one hand, the       GMS and, on the other hand, the Drugs Payments Scheme, Long Term Illness       Scheme and other community drugs schemes, by: _
> _(i) introducing a new higher dispensing fee structure for the           schemes based on a sliding scale as follows: €5 for first 20,000           items, €4.50 for next 10,000 items and €3.50 for the remaining           items; and _
> 
> _(ii) reducing from 50% to 20% the retail mark-up payable under           the community drugs schemes (no mark-up is payable under the GMS);           __In these two measures, the Minister is responding to concerns           expressed by pharmacists that medical card dispensing is           cross-subsidised by the retail mark-ups on the other schemes. This           should benefit pharmacies with relatively more medical card           patients, for example, those serving poorer areas. _
> 
> 
> 
> _(b) end a special payment to pharmacists in relation to the       automatic entitlement of persons over 70 to a medical card, as that       entitlement has been ended; and_
> 
> 
> _(c) reduce the ‘wholesale mark-up’ reimbursement price paid for       delivery of drugs to community pharmacies, from 17.66% to 10%. This       mark-up was intended to pay for wholesale distribution costs but it is       almost double the European average for this type of service.       Approximately half of this mark-up is being passed back by wholesalers       to pharmacists by way of discounts. _
> _The measures will be given effect through Regulations to be issued by     the Minister in due course. It is intended to implement them with effect     from 1 July._
> 
> 5,000 jobs isn't a _threat_, its an unavoidable conclusion.


Any data to back this up? It would be interesting to see the split of revenue and profit between the prescription business and the OTC business for pharmacies. And the number currently employed in pharmacies. And the profitability level of pharmacies. Do you believe that pharmacies aren't outrageously profitable?


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## outperform

I can tell you from looking at my figures yesterday that the OTC section of my business has dropped 20% year on year. Big deal, whose hasn't you might say. Anyway, at those figures, my front of counter business is losing me money as we speak.


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## outperform

Complainer said:


> You need to get out more.
> 
> Thanks for the explanation, which is more than I got from my pharmacy, despite me being quite vocal and irritating.



All part of the service! 



Complainer said:


> How does your OTC price compare to the US OTC price? Is Ireland the only country to go prescription only for aspirin?



Unfortunately I don't have the luxury of being able to reference US retail prices when I'm trying to earn a profit! However, I am aware that in different jurisdictions there are different rules and prices for different medicines. For example, in the US, Zovirax cream and I think Zirtek antihistamines are prescription only. I know that the Zovirax is also expensive. Here you pay 10euro or so to buy it over the counter or 6 or 7 euro for the generic equivalent. Here, melatonin is prescription only. In the US you'll find it in the vitamin section. I don't know how they treat aspirin 75mg in other countries.




Complainer said:


> Many people are on ongoing prescriptions. I'll probably be on medication for blood pressure for the rest of my life, so I have lots of time to shop around.



Hope you find a good pharmacy. I hear they've great value in Boots for shampoos and razors.




Complainer said:


> Any data to back this up? It would be interesting to see the split of revenue and profit between the prescription business and the OTC business for pharmacies. And the number currently employed in pharmacies. And the profitability level of pharmacies. Do you believe that pharmacies aren't outrageously profitable?



Like all business sectors, theres good and bad. Aer Lingus and Ryanair. Which is the good or bad between those two? I know some pharmacy businesses that are doing very well, and some that are struggling badly, and some that have closed due to recent economic occurences - not to mention poor location, over-leveraged, poorly managed etc. Make no mistake, should these cuts go ahead as announced, it will effectively be a government-backed cull of pharmacies. Don't expect any better competition or lower prices from the ones that survive. In fact I can guarantee you that as the prescription volume increases for surviving businesses, service levels will go down as it won't be worth employing extra staff.


In short, I _know_ that most pharmacies aren't outrageously profitable.


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## outperform

gearoid said:


> Why should the state pay enormous sums and make massive subventions to enable a small coterie of people make massive profits?


Show me the massive profits! There's massive money involved OK, not a lot of it is profit - its mostly debt - secured on a government contract that they're now changing the law in order to renege on it.



gearoid said:


> Because the government has been weak, and the pharmaceutical lobby has been strong. Fostering internal competition will strengthen the country and save people money. The over-emotive guff from the pharmaceutical lobby should be resisted.



So you're OK with 5000 job losses then? And roughly 300 pharmacy closures? Even the ones that don't go wallop will cause even more trouble for the banks.



gearoid said:


> Labelling cuts in a _GUARANTEED 50% mark-up_ as brutal is quite frankly bizarre! Why should there be any guaranteed mark-up?



The magnitude of the drop in income is absolutely brutal. The 50% mark-up (33% margin) only applies to the DPS part of the prescription business - roughly 70% of my business is GMS (medical card) which has a guaranteed 0% mark-up (0% margin). I haven't worked out yet what 20% mark-up is in margin terms. The average pharmacy will see a drop of 36% in their income from these cuts.Thats one hell of a haircut by any standards!  Every other health professional and legal professional had their fees cut by 8%. Harney has a massive chip on her shoulder about pharmacy.She tried to implement similar cuts last year and she lost the battle in court. Now she's had the law changed to kill the profession.


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## Complainer

outperform said:


> The magnitude of the drop in income is absolutely brutal. The 50% mark-up (33% margin) only applies to the DPS part of the prescription business - roughly 70% of my business is GMS (medical card) which has a guaranteed 0% mark-up (0% margin). I haven't worked out yet what 20% mark-up is in margin terms. The average pharmacy will see a drop of 36% in their income from these cuts.Thats one hell of a haircut by any standards!  Every other health professional and legal professional had their fees cut by 8%. Harney has a massive chip on her shoulder about pharmacy.She tried to implement similar cuts last year and she lost the battle in court. Now she's had the law changed to kill the profession.


Are you ignoring the OTC business in these comparisons - 36% of the prescriptions, but not 36% overall - right?


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## Fatphrog

> Are you ignoring the OTC business in these comparisons - 36% of the prescriptions, but not 36% overall - right?





outperform said:


> I can tell you from looking at my figures yesterday that the OTC section of my business has dropped 20% year on year. Big deal, whose hasn't you might say. Anyway, at those figures, my front of counter business is losing me money as we speak.


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## Protocol

Hopefully these reforms will:

bring down the price of prescription drugs
reduce the excessive monopoly profits earned by pharmacies
and so increase the welfare of society


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## Protocol

As only 1/3 of the pop have a med card, how can med card trade be 70% of business?


Mary Harney makes a good point: 

“Put simply, it should not cost €640 million to get €1.04 billion of drugs from the factory gate to the patient,” she said.


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## samanthajane

Complainer said:


> But you do know of someone in your circle of family and friends travelling over the next six months?


 


Smashbox said:


> No, I don't.


 


Complainer said:


> You need to get out more.


 
Apart from myself, i dont know anyone else that is going away either. 

Do i need to get out more aswell??


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## outperform

Protocol said:


> As only 1/3 of the pop have a med card, how can med card trade be 70% of business?



Given that most of the medical cards are given to the elderly and people with high medical needs, e.g. transplant patients, they constitute the majority of business in 90% of pharmacies. I am far from unique - in fact my percentage is roughly average.




Protocol said:


> Mary Harney makes a good point:
> 
> “Put simply, it should not cost €640 million to get €1.04 billion of drugs from the factory gate to the patient,” she said.



She's right. It shouldn't. As pharmacists we could inform her of plenty of fairer and less destructive ways to reduce that cost, and of reducing the horrendous waste of drugs pharmacists see regularly. She doesn't think we're worth talking to, however. Just talking down to. 
Having said that, pharmaceuticals aren't just an ordinary commodity. She'd be more right if she was talking about the cost of bringing cornflakes from the factory gate to the consumer. In her eyes, we're just retailers - not health professionals. Next time you have a query for your pharmacist (maybe you couldn't be bothered going to the doctor) thats worth bearing in mind.


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## jpd

As for the job losses, what about the effects of everyone paying higher prices than they should ? Putting that extra money into consumers hands will generate more jobs elsewhere in the economy.

This sort of argument is used all over the place to justify special treatment for a few, at a price to be paid by all !


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## outperform

I don't regard expecting fair and reasonable negotiations as special treatment. We're getting special treatment from Harney alright - a big two fingers!


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## Smashbox

samanthajane said:


> Apart from myself, i dont know anyone else that is going away either.
> 
> Do i need to get out more aswell??


 
Thanks Sam, I did wonder why I need to get out more just because I dont know anyone travelling to America. Complainer, can you explain that one? And how you know that I dont get out too much, which in fact isn't true at all?


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## Fatphrog

Going to america to save a few euro on aspirin is a bt much. you could always buy a pack of disprin 300mg, less than €3 in Ireland I think, and divide them into 4. This is easy to do with the dispersible tablets since they are quite large.


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## gearoid

outperform said:


> So you're OK with 5000 job losses then? And roughly 300 pharmacy closures? Even the ones that don't go wallop will cause even more trouble for the banks.



Your argument is economic nonsense.

It won't come to that. De-regulation and competition should benefit the wider society in the end. If there are a few temporary job losses then so be it. The more efficient pharmacists will flourish and provide cheaper and better services for the public and create employment. It isn't as if pharmacies are major exporters from Ireland. People will still get sick and need pharmacies so this kind of apocalyptic vision is being provided to justify unfair restriction of competition.

See this interesting EU internal market study.

[broken link removed]

The summary findings would support de-regulation.

In short lets de-regulate and see how it goes. Why should we pay to protect pharmacies when the export sector is suffering so much? It makes more sense to support export-led businesses than pharmacists.

This country should develop an aggressive internal market for services.


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## Fatphrog

gearoid said:


> Your argument is economic nonsense.
> 
> It won't come to that. De-regulation and competition should benefit the wider society in the end. If there are a few temporary job losses then so be it. The more efficient pharmacists will flourish and provide cheaper and better services for the public and create employment. It isn't as if pharmacies are major exporters from Ireland. People will still get sick and need pharmacies so this kind of apocalyptic vision is being provided to justify unfair restriction of competition.
> 
> See this interesting EU internal market study.
> 
> [broken link removed]
> 
> The summary findings would support de-regulation.
> 
> In short lets de-regulate and see how it goes. Why should we pay to protect pharmacies when the export sector is suffering so much? It makes more sense to support export-led businesses than pharmacists.
> 
> This country should develop an aggressive internal market for services.



Irish pharmacy has been deregulated for years and the deregulation process is now complete with foreign trained pharmacists now able to open and work in new pharmacies. A pharmacy can be set up anywhere. 

The change is pharmacy renumeration is not deregulation, it's a straight cut in pharmacy income. This will lead a reduction in services because pharmacies will employ less staff. With less staff, pharmacists will be able to spend less time with patients and will stop services such as free blood pressure checks.


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## gearoid

Fatphrog said:


> Irish pharmacy has been deregulated for years



I pay the same overinflated price everywhere for OTC and non-OTC pharmacy products. Is that full deregulation?


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## Fatphrog

The cup of coffee I bought earlier cost too much. Do coffee shops need deregulation?


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## Eithneangela

Just back from France.  On monthly Bonviva tabs for osteo - €60 here for one here, got 3 for €70 in France.  Exactly the same mg. and even packaging.  Wake up - greedy pharmacies in Ireland


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## gearoid

Fatphrog said:


> The cup of coffee I bought earlier cost too much. Do coffee shops need deregulation?



This comment misrepresents the current situation.

There is price competition in the coffee area.

I don't pay the same price for a capuccino in every shop.

Every shop where I buy my eye drops charges me 4.56 euros for the product.

Try Economics 101. Which situation is the more open to overcharging?

There's a cream I sometimes buy which is 27-28 euros in ALL chemists. In Spain it's 10.40 euros. Please pharmacy experts tell me where the 17 euros is going?

In the car industry price cartels bring garda investigation.

In pharmacies the poor consumer just puts up with the same awful price due to a scheme which doesn't allow for price competition.

The market is being skewed by this. Look at Rathmines. I would wager that there are large numbers of pharmacies because they can all make a high state guaranteed profit on prescription and OTC medicines.

No wonder there has been the sudden explosion in shops in recent years. 

The state can no longer afford to provide sweetheart deals to special interest groups like the pharmacy sector.

And yes it has become less regulated in recent years but I'm afraid that pharmacy interests in Ireland were dragged kicking and screaming to that point.

We can no longer put up with a competitive export sector being held back by under-competitive and over profitable services in the domestic sector.

Gearoid


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## Fatphrog

gearoid said:


> There's a cream I sometimes buy which is 27-28 euros in ALL chemists. In Spain it's 10.40 euros. Please pharmacy experts tell me where the 17 euros is going?



If the price is €27-28, you can be guaranteed that the irish pharmacies are paying more than €10.40 for the product from the wholesalers.



> The market is being skewed by this. Look at Rathmines. I would wager that there are large numbers of pharmacies because they can all make a high state guaranteed profit on prescription and OTC medicines.



There is no state guaranteed profit on OTC medicine.
Medicines here, OTC and prescription, are more expensive partly due to the high cost of licencing a medicine with the Irish Medicines Board. The price of the OTC weightloss drug Alli highlights this. It was given a pan-european licence instead of needing local licences in each member state and as a result, irish pharmacies are selling it for the same price, and in some cases slightly cheaper than pharmacies in britain.


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## gearoid

Thanks phatfrog,

Now we are getting down to some interesting information. I don't claim to be especially knowledgeable, just a particularly sinical consumer given the past antics of your professional organisations e.g limiting numbers of students, preventing foreign pharmacists entering market etc. etc..

I as a consumer want to know who is taking such a big slice of the cake.

I have seen numerous instances where Greek and Italian prices are actually on the medicine.

So, is that someone actually avoiding the local wholesaler? You were very limited on the actual details.

Here's a prescription (30g Lamisil cream). Who is making the 17 euros, you or the wholesaler?

Also, if there's no guaranteed price why am I paying the same amount in all chemists?

Also if no one is expecting you all to charge the same then why should I pay the same everywhere? Surely one of your number would put things on special offer?

No one has yet answered that question from the pharmacists among us, and no one has put up an academic or moral argument for justifying it.

All I get is grim forebodings of pharmacists on the bread line. To put it mildly I couldn't give a fiddlers given your past history.

In my industry (IT) you had to be particularly bright to make a million, given you had competition from India/Israel/UK/US. In times past you just had to open a pharmacy in a new estate to do the same given the then restrictions to practice based on pharmacy special interest pleading.

I would say at this stage you really need to try EXTRA HARD to justify the IPU statements over the last few days. I and many others just think it's special pleading (bleeting more so) from an already cosseted local interest group.

Regds,]
Gearoid


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## gearoid

Protocol said:


> http://www.ncpe.ie/
> 
> Here is an agreement between the HSE and the manufacturers:
> 
> [broken link removed]
> 
> 
> A HSE presentation on reducing drug costs:
> 
> [broken link removed]



I have just read the APMI_Agreement_Amended_2009_.pdf document.

This would indicate that the price for a specific medicine should be amended to the lowest wholesale price in any one of a number of nominated countries given certain conditions in the agreement between the APMI and the HSE. Spain is one of the nominated countries.

I am picking one pharmaceutical product. It costs 10.40 eu in Spain and 27 euros in Ireland.

Based on the agreement and my limited legal knowledge the HSE should be sourcing it at the price of the cheapest wholesaler price given in the list of countries including Spain.

To make a profit any pharmacist in Spain must be charging a mark-up. They charge 10 euros 40 cent. Irish price is 27 euros plus. (Lamisil 30g).

Based on the HSE/IPHA agreement who isn't doing their job?

How much is the GMS paying in these straightened times?

Someone is making an abnormally large profit. I want to know who it is!


----------



## outperform

Try the members of IPHA. They got a sweetheart deal with the HSE last year, but the HSE won't even negotiate with the IPU - citing competition law! The EU commissioner disagrees with their opinion - and last year we had an agreement to negotiate. Then Harney came along and changed the law. 8% cut in payments to otherr health profs - 36% cut in government income to us. 

Short and simple.


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## outperform

Asa matter of interest - how much does each job lost cost the state on average? Say a very conservative 25k per annum global sum including reduced PAYE etc. Say 5,000 jobs aren't lost - its only 3,000 (personally I think it'll be v close to the 5k). 3,000 by 25000 = 75million euro cost (conservatively) Harney estimates the cuts will save 133million per year. Shurely shome mishtake?

Other figures: HSE annual budget 14 billion euro.
                    Public service pay bill: circa 20 billion euro.

Yet we get the law changed for special cuts!


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## RainyDay

It's great to have a number of pharmacists engaging on this important topic. It would be better still if they provided some answers to the questions being asked.

For example, what is the typical split of revenue between OTC and prescriptions in a pharmacy?

It's not quite fair to focus solely on the pharmacists, mind you. There are others taking large amounts of money along the supply chain. For example, the manufacturers manage to encourage the GPs to prescribe particular products, through 'training' (usually provided in a very nice location, with very nice food and drink attached) or 'education' (usually provided by a bubbly, blonde ex-nurse who jumped at the chance to swap a Mondeo and regular hours for getting abused by drunks.


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## gearoid

I agree with the thanks to pharmacists in engaging in this discussion. I know my posts may sound like an uninformed rant but I'm learning from the links.

I've found a very interesting website that gives me the pharmacy trade price.

It is:



My two examples:

14277	Artelac Eye Drops 10 ml. (B)	€2.51 - I pay 4.56 euro every time

30973	Lamisil Cream 30 G. (B)	€11.9	 - I know this retails at 27 euros plus.

So who pockets the money?


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## sidzer

The potential loss of jobs in a sector is not a valid argument against reforms in the system if it is not offering value for money to the state.

The Irish consumer and tax payers deserve a fair system and it is clear from above discussion that this has not been the case until now.

Roll on reforms


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## csirl

Fatphrog said:


> What restrictions?


 
Price restrictions as the prices are set centrally. No point in a supermarket setting up a pharmacy counter if it cant charge cheaper prices that high street pharmacy.

The whole industry is a disgrace - flouts the free market. There should be no price setting negotiations - the price should be determined by the market.


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## outperform

gearoid said:


> I agree with the thanks to pharmacists in engaging in this discussion. I know my posts may sound like an uninformed rant but I'm learning from the links.
> 
> I've found a very interesting website that gives me the pharmacy trade price.
> 
> It is:
> 
> 
> 
> My two examples:
> 
> 14277    Artelac Eye Drops 10 ml. (B)    €2.51 - I pay 4.56 euro every time
> 
> 30973    Lamisil Cream 30 G. (B)    €11.9     - I know this retails at 27 euros plus.
> 
> So who pockets the money?



On the artelac - the government makes more than I do. I add a 50% mark-up (33% margin) = 1.25 euro. The government then gets 21.5% VAT (=1.56 euro) plus corporation tax, PAYE from me and my employees, rates, professional registration fees etc. - as with any other retail business it must be added.
Same with Lamisil 30g. Govt gets 4.59 in VAT. I charge a 50% mark-up (5.95) plus in this case a dispensing fee (which can vary between pharmacies - its not set). My fee is 3.50 euro. Which comes to 25.94 for that. It is also now available OTC in 7.5g tubes (ask for the generic version its cheaper). My price on the OTC generic is 4.56 euro - same as the artelac coincidentally. You can buy 4 of these OTC for less than the price of the 30g Lamisil on prescription. Mention it to your pharmacist - he/she may not be aware of this. 

As for the split in business between OTC/prescriptions - it depends on the business. As a small, local, independent pharmacy mine is roughly 20/80. A typical Boots would probably be 80/20.


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## Petrus

gearoid said:


> My two examples:
> 
> 14277 Artelac Eye Drops 10 ml. (B) €2.51 - I pay 4.56 euro every time
> 
> 30973 Lamisil Cream 30 G. (B) €11.9 - I know this retails at 27 euros plus.
> 
> So who pockets the money?


 
The manufacturers of the products.

If you go to a Doctor and (s)he prescribes a particular product, say Lamisil or Artelac, the product you will get is set. The maunfacturer will be the same one, ie only one company makes Lamisil and another makes Artelac. All pharmacies in this country use one of 3 main wholesalers.
There is no competition before retail level.
The Government subsidises a large chunk of total drug costs in this country. They set drug prices with the IPHA companies. Wholesale margin is set between the PDF and IPHA. 

So the makers of Lamisil in Ireland charge our government one price and the makers of Lamisil in Spain charge the Spanish government a totally different price. Pharmacists do not set the prices of drugs in Ireland. Most pharmacists agree that the prices of drugs in this country is too high. Unfortunately they can do nothing about it, they are not party to the IPHA or APMI agreements.


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## Fatphrog

csirl said:


> Price restrictions as the prices are set centrally. No point in a supermarket setting up a pharmacy counter if it cant charge cheaper prices that high street pharmacy.
> 
> The whole industry is a disgrace - flouts the free market. There should be no price setting negotiations - the price should be determined by the market.



This is incorrect. There are no price restrictions. For example, I saw a bottle of Zirtek liquid on sale for €7.50 in one multiple pharmacy recently while it is on sale for over €11 alsewhere.

I don't know why more supermarkets here don't have pharmacies in them but there is no reason why they can't. Obviously they aren't going to start now that pharmacy renumeration has been slashed.

gearoid, VAT. letter to your TD if you're that bothered


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## gearoid

outperform said:


> On the artelac - the government makes more than I do. I add a 50% mark-up (33% margin) = 1.25 euro. The government then gets 21.5% VAT (=1.56 euro) plus corporation tax, PAYE from me and my employees, rates, professional registration fees etc. - as with any other retail business it must be added.
> Same with Lamisil 30g. Govt gets 4.59 in VAT. I charge a 50% mark-up (5.95) plus in this case a dispensing fee (which can vary between pharmacies - its not set). My fee is 3.50 euro. Which comes to 25.94 for that. It is also now available OTC in 7.5g tubes (ask for the generic version its cheaper). My price on the OTC generic is 4.56 euro - same as the artelac coincidentally. You can buy 4 of these OTC for less than the price of the 30g Lamisil on prescription. Mention it to your pharmacist - he/she may not be aware of this.
> 
> As for the split in business between OTC/prescriptions - it depends on the business. As a small, local, independent pharmacy mine is roughly 20/80. A typical Boots would probably be 80/20.



Thanks outperform.
That was a very helpful post.

I wanted to see where the difference is between what I buy in Barcelona and what I buy in Dublin. This gives me a lot of information.

It looks like everyone is getting a cut!

I do try to buy generics today but many pharmacies don't stock specific ones that would save money. Domperidone is usually only available branded as Motilium whereas Rowex Domerid is far, far cheaper. I only ever seem to find it in the midlands and west.

I wonder whether the manufacturer's are getting higher prices as the pharmaceutical sector is such a big employer and the government wants to placate them in some way?

It would seem from the deal that the HSE have a right to source cheaper drugs but possibly don't.



Fatphrog said:


> gearoid, VAT. letter to your TD if you're that bothered


I was musing about that in a quiet moment in work as it happens!
I am angling for a job on the board of the CAI but it seems they want colourists not competition activists!


----------



## outperform

gearoid said:


> I wonder whether the manufacturer's are getting higher prices as the pharmaceutical sector is such a big employer and the government wants to placate them in some way?


Bang on. Gov doesn't want to upset big pharma. 
Too many jobs + exports at stake.


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## locum-motion

Protocol said:


> As only 1/3 of the pop have a med card, how can med card trade be 70% of business?
> 
> 
> Mary Harney makes a good point:
> 
> “Put simply, it should not cost €640 million to get €1.04 billion of drugs from the factory gate to the patient,” she said.


 

From a Pharmacist (who doesn't own a shop):

2 good questions, Protocol.

A1. Over 33% of the pop have GMS cards, but that cohort of patients has a much greater usage of medications than the mostly younger, mostly wealthier people who don't have cards. Overall, 74% of the cost of the country's drugs bill goes on GMS prescriptions. A little higher than the figure for Outperform's pharmacy.

A2. Why should it cost €640M etc? Put simply, because a medicine is not the same as a stapler or a roll of sellotape! Pharmacists provide a valuable service in ensuring the safe and effective supply of medicines. Additionally, we provide other services such as free advice without appointment, which amongst other things reduces unneccessary visits to GP or A&E. PriceWaterhouseCoopers detemined that the provision (for free) of these services by pharmacists saved the public and the Excehquer €460M in 2007.
Also, a fair chunk of that €640M goes towards the wholesalers' profit, not the pharmacist.
So, we get paid less than €640M, to provide ALL our services, the free ones and the remunerated ones!


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## conor

Pharmacists are willing to play their part on reforms and cost-cutting. It is the scale of the reforms that are breath-taking. It is an abuse of democratic power to use the financial services emergency bill to reduce other professionals payments by 8% and pharmacists by 30-40%. This will immediately leave hundreds of pharmacies closed down and unemployed. Reforms should be managed in a more responsible manner.


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## fobs

conor said:


> Pharmacists are willing to play their part on reforms and cost-cutting. It is the scale of the reforms that are breath-taking. It is an abuse of democratic power to use the financial services emergency bill to reduce other professionals payments by 8% and pharmacists by 30-40%. This will immediately leave hundreds of pharmacies closed down and unemployed. Reforms should be managed in a more responsible manner.


 
I feel we are oversupplied with pharmacies at the moment and maybe some of them should close down the same way as many other non-profitable retail businesses have had to. I live in a small town and we have 5 pharmacies. I feel this is too much. 2 pharmacies opened in the last 2 years, These I feel are not offering enough diversity to merit there
being 5. If this is repeated tyhroughout the country then the closure of pharmacies makes sense as there didn't seem to be a market for them in the first place.


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## locum-motion

gearoid said:


> I have seen numerous instances where Greek and Italian prices are actually on the medicine.
> 
> So, is that someone actually avoiding the local wholesaler? You were very limited on the actual details.


 
What's happening there, Gearoid, is a case of what's called Parallel Importing. Let's say Manufacturer A makes a product B, and had licenses to sell it from the relevant authorities in the various EU countries (In Ireland, it's the IMB, and the license is called a Product Authorisation or PA. There should be a PA no printed on the packaging, if you get your prescription meds in their original box).
The manufacturer sells the product to the various wholesalers in each of the countries. Now this is the vital bit: the price is different in each country. In Ireland, that ex-factory price is set by an agreement between the manufacturers and the Government, and the wholesalers sell it to pharmacies at the ex-factory price plus a 17.66% mark-up (which is equiv to a 15% margin). This is the cost price to the pharmacy, which will have VAT added to it if appropriate. Up to now, this figure (we'll refer to it as the invoice price) is the basis upon which the Govt calculates how much it has to pay the pharmacy. Typically the pharmacy will also use this price as its base for calculating the selling price on a private prescription. My point here is that the pharmacy has NO SAY OR INPUT into what the invoice price is, only in what they do afterwards.

Now, remember I said the ex-factory price is different in each country. In Spain and Greece especially it is only a small fraction of the price here. I'm not sure why, but I believe it has something to do with different intellectual property rights laws there. So why don't we just buy from the spanish factory? It's a free European market, isn't it? Well, yes and no. Pharmacies in Ireland are required by law to purchasse their supplies from wholesalers that are licensed in Ireland. And in general, the product they supply is the product that comes direct from the manufacturer.

That is where Parallel Importing comes in. There are a small number of companies who engage in this practice. A couple of examples are PCO and Imbat. What they do is track fluctuations in prices of various meds in various countries. When they ID a product and a pair of countries where the difference in price is big enough to make it worth their while, they will:
a) Apply for a Parallel Product Authorisation (PPA) number from the IMB (or corresponding body in destination country)
b) Buy up all of the product they can get their hands on
c) Do whatever labelling/repackaging they have to do to satisfy legal conditions in destination country. This will include the PPA no printed on the packaging, similar to the PA number mentioned above
d) sell the repackaged product for the best price they can get (which, if they want it to be reimbursible on Govt-paid schemes, has to be agreed with the Govt in the same way as the 'regular' products are)
Once again, the pharmacist has no say in the price he pays.
By the way, this is all perfectly legal.
If you get a product from a pharmacy that has, for example, the days of the week printed in French, this is probably a Parallel Import. In some cases, and one that I know about is Spain, there will be a price printed on the box, beside the barcode or the expiry date. As far as I know, but I am open to correction on this, this price is what the pharmacy in Spain would buy the product from a Spanish wholesaler for, NOT the price that the consumer pays in the Spanish pharmacy.

So why don't all pharmacies just use the Parallel products? A couple of reasons. Firstly, some patients don't like them or trust them. Secondly, not very many products are available in this way as it only happens if the price differentials are right. Thirdly, only a comparitively small amount of each product is available, as the Parallel Importers have to pick up what they can in the source country, without leaving a shortage of supply there. Fourthly, the price difference by the time the Parallel Importer has done his bit is really not usually very much, and it may not be worth a pharmacy's while various reasons such as he may fall beneath a target set by his main wholesaler.

Unfortunately, there do exist SOME pharmacies who exploit this for their own benefit. If your pharmacy is supplying you with a PI product, you should make sure that they're CHARGING you for the PI product, so that YOU'RE the one to benefit from this reduced cost. MOST pharmacies who supply PIs will do this as a matter of course. However, as in every barrel, there may be a couple of rotten apples.

Hope this helps. Your questions/doubts about Spanish prices etc should be answered now. Answers to other questions are for another post; this one's long anough already!

One more thing, though, and if you have read all the previous posts you'll know that yes I'm a pharmacist and no I don't own a shop. My interest has been declared. Please believe me when I tell you that there is no cosy cartel of pharmacists keeping prescription prices artificially high compared to Spain etc. The difference in prices are ALMOST ALL caused by the fact that we have to buy them at a much higher price than in other countries, and then we have to try to make a profit when we sell. And as everyone knows, that's getting harder and harder these days (and will become virtually impossible if/when the minister's cuts go ahead).


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## Protocol

What I would do:

reduce wholesaler mark-up from 17.65% to 10%

reduce pharmacy mark-up from 50% to 33% or maybe 25%.

Ex-factory = 100
Wholesale price = 110
Pharmacy price = 146.30 or 137.50


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## gearoid

locum-motion said:


> What's happening there, Gearoid...



Many thanks for the length, detail and informational nature of this post.

The situation is indeed a lot more complex that I or the rest of Joe Public would have realised.

It doesn't get over the issue that we are paying far more than our European neighbours for pharmaceutical products.

We need consumers to apply pressure, whether political or otherwise, to hopefully improve matters. Thus my opening this thread.


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## locum-motion

gearoid said:


> Many thanks for the length, detail and informational nature of this post.
> 
> The situation is indeed a lot more complex that I or the rest of Joe Public would have realised.
> 
> It doesn't get over the issue that we are paying far more than our European neighbours for pharmaceutical products.
> 
> We need consumers to apply pressure, whether political or otherwise, to hopefully improve matters. Thus my opening this thread.


 
Thank you. I'll address some of your other queries sometime when I'm feeling energetic enough. In the meantime - and as Gearoid says above - please remember that the situation _IS_ alot more complex than you might realise. In the coming days/weeks, you're going to hear more and more about the minister's cuts in Govt payments to pharmacists. When you hear that, please don't just think "Ah, sure, those guys have been ripping everyone off for years! It's about time." Instead, please go and talk to your local pharmacist. Ask him/her to explain how pharmacists are paid, how they will be paid in the future, and what the changes mean to the services that he/she will provide in the future. You'll find the pharmacist willing to talk to you, and very open and honest. And you might get a big shock about a profession that everyone thinks of as a license to print money. I had more disposable income as a barman 20 years ago than I do now. I had more disposable income during my Pre-Registration year (13 years ago) than I do now. (Pre-registration is like a year of work experience between when you get your degree and become a qualified pharmacist). And I certainly wouldn't let my nephews/nieces choose pharmacy as a career.
Thank you for listening to my rant.


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## Complainer

Thanks again to the pharmacists for helping to bring some light to this discussion. Can any of you suggest how the pharmacists can help to get better value for money from the drug companies, who are a big part of the problem? In many other industries, the retailers play a key role in 'keeping manners' on the manufacturers / distributors.


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## locum-motion

samanthajane said:


> My daughter had to go to the doctor last week, doctor was 60 euro and the medicine was 33 euro.


 
This is something that baffles me:
Why do we always hear complaints about the €33, but never about the €60?

Don't forget, please, that out of the €33 you paid the pharmacist, s/he had to _buy the medicine in in the first place!_
Depending on what the item was, that would have been either:
approx €20, or
approx €16.50 + VAT @ 21.5% = approx €20.

So, therefore, the pharmacist made a gross profit of about €13...
(SamanthaJane: If you wish to tell me - via PM if neccessary - what the item and quantity was, I'll check and post up the exact cost price here, and tell you the exact profit made!)

So, why don't we hear complaints about the €60? After all, the 'cost price' of a sheet of headed notepaper and some ink is probably €0.001. The GP's 'gross profit' is €59.999!

And before anyone reminds me about the other costs involved, please remember:

1. that they all come after gross profit, not before, and

2. that;
a. Both the doctor and the pharmacy have rent/lease/mortgage to pay on their premises.
b. Both employ staff.
c. Both have electricity bills/insurance etc to pay.


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## locum-motion

gearoid said:


> I don't claim to be especially knowledgeable, just a particularly sinical consumer given the past antics of your professional organisations e.g limiting numbers of students, preventing foreign pharmacists entering market etc. etc..


 
Hi Gearoid,
I promised readers of this thread a few days ago that I'd get back to you again about some more of the questions raised, so I was re-reading most of the posts, and your quote above really jumped out at me as something that badly needs clarification.

What "professional organisations" are you referring to? If we're talking about the profession of pharmacy, there are basically two that you maybe referring to; The Pharmaceutical Society of Ireland (PSI) and The Irish Pharmacy Union (IPU).
The PSI is the body that _regulates_ pharmacy.
The IPU is the body that _represents_ Community Pharmacists.

My understanding of what you're trying to say above is that the representatives of the alleged pharmacists' cartel are responsible for restricting entry to the profession via limiting of academic places and restrictions placed upon the practice of foreign pharmacists.

Here are the facts:
For many years, there was only one School of Pharmacy (SoP) in Ireland (The Republic, that is). This was in Trinity College, and had 50 places per annum. The number of places was detemined by many factors, not least of which was the size of the building used, which was not actually owned by TCD but by the PSI. Other factors would have been under the control of TCD, the Dept of Education, the Dept of Finance, and many other bodies, but in no way whatsoever controlled by the IPU or any pharmacists. For many years, the IPU campaigned to have the number of places increased.
Since the late 80's, there has been free movement of professionals throughout the EEC/EU. Anyone who registered as a pharmacist in any EEC/EU country could come here (or go to any other EEC/EU country) and register and practice as a pharmacist. They didn't even have to satisfy any language requirements. In the main, three large groups of people made use of this facility; Spaniards, Poles, and Irish people including myself why went to Great Britain to study in the various SoP's there. There were of couse occasional others who didn't fit into any of these three categories. In addition, there were two other possible routes for registration: Pharmacists registered in Aus or NZ could do a 1 month pre-registration period and an exam and then register, and finally pharmacists from elsewhere could present their credentials and the PSI would decide how much study/pre-reg they would have to do before registering. I know one Canadian who registered this way; he was asked to do 4th year in TCD and then a pre-reg year same as the rest. These four possible routes for registering were laid down in law. There are not and never have been any restrictions placed on the practice of Irish, Australian, New Zealand or 'other country' pharmacists. However, until last year, EEC/EU graduates like myself were not recognised as pharmacists in pharmacies less than 3 years old. Therefore if I had opened a new pharmacy, I would have had to employ someone else in it for the first three years. This restriction was laid down in European law as part of the original free-movement laws. It was challenged many times in Irish and European courts, with the support of the IPU. All challenges failed. However, it was finally removed whan the Pharmacy Act 2007 was commenced last year. The IPU had been actively campaigning for a new Pharmacy Act since before I qualified (The old ones dated back to 1875!)
A number of years ago, TCD SoP moved into a new building on the main campus in the city centre, and increased to 70 places per annum. The building they used to use, at 18 Shrewesbury Road, is now the HQ of the PSI.
Within the next couple of years after that, both the Royal College of Surgeons in Ireland in Dublin and UCC in Cork started SoP's, and they now account for 105 graduates per annum between them.
All of these new places were welcomed by the IPU, which awards prizes to the top students in each of the three SoP's.

So, please, don't accuse our representatives of restrictive "antics".


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## locum-motion

And finally... (unless someone comes back with more questions!!)

The answer to the original question, which was:
"Pharmacies - Price competition - Why is there none?"

There is price competition between pharmacies in most sections of the business. Let's say the business breaks down into four main sections:
1. Prescriptions for which the Govt pays.
2. Private prescriptions, for which the patient pays.
3. Over the counter medicines.
4. Sundries, such as shampoo, razor blades and all the rest.

I'm going to look at each of these, but not in order coz I'll get the brief ones out of the way first.

4. There is considerable price competition between pharmacies on this type of item. It is easily verifiable. Just go into 5 different pharmacies and look for, I dunno, a bottle of Radox or something. Let me know how you get on.

1. No price competition whatsoever. The Govt decides how much they're going to pay, and they pay all pharmacies the same amount. It is these payments that Mary Harney's just announced drastic cuts to, amounting to, on average, 36% of the gross profit for this activity. Gross profit is made up of: fees, allowances, mark-ups and discounts received. For every € that a pharmacist used to get for this activity, they'll now get €0.64. Other sectors of society are being ask to give up 8%. We're having 36% imposed upon us.

3. Over the counter medicines. There is price competition, but not a huge amount of it, for various reasons. Mainly, remember that medicines are not ordinary items of commerce. If I run a bike shop, I'm going to try to sell you the fanciest, shiniest bike I can, with lights and bells and a new helmet. If I'm selling you a medicine, I'm trying to sell you what will make you better and/or relieve your symptoms. There are ethics and laws involved. We only sell you 12 or 24 paracetamol tablets because that's what the law says, and in any case, as the package says "If symptoms persist, consult your doctor". If your headache hasn't gone after a day or two on paracetamol, there's something more serious wrong that needs to be checked out. We can't sell you a jumbo pack because a) it's illegal and b) it's unethical.
A packet of Solpadeine sells for the same price - give or take a few cent - in almost every pharmacy. Those words "give or take a few cent" are very important. We all buy them off one of the same three wholesalers, or perhaps through the manufacturer's sales rep, for the same invoice price. We all want to make a profit when we sell it, and most of us have approx the same percentage in mind. Differences arise because:
a) different pharmacies get different amounts of discounts from the wholesaler depending on the size of their account.
b) the pharmacy may decide to pass all, none or some of this discount on to the customer.
c) some may decide to aim for a slightly higher or lower percentage profit depending on the affluence or otherwise of their location.
d) some may decide to round the price up or down a few cent for convenience's sake.

Either way, look around for the price differences. They might not be very big, but they are there. (Somebody gave the example of a huge difference in Zirtek liquid. I don't have any price lists in front of me, so can't look up either of the prices, but it was a massive difference. Are you sure the two bottles were the same size?)

Incidentally, the pharmacist is perfectly entitled to make as large a profit as s/he thinks they can get away with on these items. A pharmacist is the only person in any kind of shop that I can think of who will actually _turn down_ a sale and sell you nothing if they think that that's what's best for you. Why not make a profit when they _do_ sell something?

2. Private Prescriptions. Now, this is the tricky one, and the bit that I suspect most readers are interested in. In alot of cases, there's not much price competition here. The reason, however, isn't the cosy cartel one might imagine. It has more to do with history, and believe it or not the amount the Govt pays for the prescriptions too. Let me explain.

It has been explained before by me and by others that the invoice price for medicines is set by an agreement between that IPHA and the Govt. The invoice price is the same whether it's going to be dispensed on a private pescription or not.

The pharmacist only controls how much mark-up (a percentage) and fee (a flat amount) he puts on to it. In practice, most pharmacists chose to put on the same fee and mark-up _that the Govt would put on if they were paying for the item through the Drugs Payment Scheme._ The reason is this: once a family's prescription bill in a given calendar month passes €100.00, the Govt steps in and pays the rest (ie if your drugs bill is €150, you pay €100 and the Govt pays €50). In this scenario, the Govt has set the mark-up (currently 50%) and fee per item (currently, I think, €3.16) that they will use for calculating the payment.
Now, If a pharmacist has decided that they'll only charge 48% and €2.75, for example, sooner or later there'll be a customer whose bill cames to, say, €98.50, and the pharmacist will say to himself "Hang on, if I get that patient to use the DPS, it only costs him an extra €1.50, but I'll get an extra (say) €6.50".
On the other hand, what if another pharmacist who's a little greedier or in a richer area is using 52% and €3.50. Sooner or later, some customer is going to have a bill that, by the pharmacist's calculations, comes to €103.50. The patient however knows his rights, so he's going to (quite rightly) say "No, put it through on the DPS, and I'll give you €100.00" So the pharmacist with a red face has to explain that "Well, actually, if I were to put that through the DPS, it would actually only be €97.50!".
Either of these situations would involve a lot of messy and time-cunsuming paperwork to correct at the last minute. When a private prescription is dispensed, neither the patient nor the pharmacist knows how many more prescriptions they'll need to get before the month is out, and whether or not the patient will hit the magic €100.00 figure. So, to avoid either of the situations described above, _many if not most _pharmacies set their fee and mark-up level at the same as the DPS level, which is set by the Govt.

Thanks you for reading. I hope I've answered all your questions. Before I go, though, allow me a couple of minutes to speak to all of those who said to themselves "50% mark-up?!? That's outrageous!!". Go on, admit it, some of you thought that, didn't you?

Here's couple of thoughts for you:

1. When you go into a clothes shop, the mark-ups are routinely 100 or even 200%. What they buy in for €10, they sell for €20 or even €30. When the sale comes around and they reduce it to half price, _then_ they are getting the same margin as pharmacists are on private or DPS prescriptions!

2. Calculated as a % of the invoice value, 74% of all drugs that the Govt pays for are on the GMS, and attract _no mark-up whatsoever, _just the flat fee. Only 26% of it gets the 50% mark up. Half of 26% is 13%. So for every €100 we pay our wholesalers, we get reimbursed €113 plus the fees (which are nice, but not huge).

There is also a discount from the wholesaler. If you have dilligently read the whole thread, you'll know that the wholesaler's margin is 15% (so, of that €100 I mentioned above, €85 goes to the manufacturer and €15 to the wholesaler.) In practice, the wholesaler gives part of this €15 back to the pharmacist in discounts. This discount has developed over time due to changes in business practices:
-these days the order is entered into the computer by pharmacy staff and transmitted electronically, so the wholesaler employs less telesales personnel;
-most pharmacies pay their bills by direct debit at months end, instead of the old practice of 60- or even 90-days credit, so there's no credit control staff needed;
-pharmacies commit to buying a certain % of their goods from one company, that sort of thing.
Discounts are a normal part of any business; that money belongs to the pharmacies who have earned it! And, to be brutally honest, the GMS scheme with its flat-fee remuneration model would have collapsed years ago without the discount. It is quite simply not financially viable on the flat fee only without that couple of percent profit that comes from the discounts.

On Thursday June 18th, the cuts that some of you mentioned above were announced. I'm not going to re-hash them all here, but I will say this: the Govt is trying to grab 6.5% of that discount from us by reducing the wholesaler mark-up to 10%, as well as reducing the 50% (which is really only 13%) mark-up down to 20% (which therefore becomes 5.2%).
In future, for that €100 worth of drugs I mentioned, the pharmacy will get reimbursed:
{85 (ex-factory gate price) + 8.50 (10% wholesaler mark-up)} + 4.86 (20% of 26% of 93.50) = 98.36 plus the fees.
Now admittedly, the fees are going to go up, but not by anywhere near enough to even begin to compensate for this loss. Remember, for the same amount of drugs, with an invoice price of €100, we used to get €113 plus a fee, we'll now get €98.36 plus a fee. And out of that, we have to pay the wholesaler €100 (less the discount, of course).

The fees, by the way, are going from €3.60 (GMS) and €3.16 (DPS) to a sliding scale of 5.00, 4.50 and 3.50; the more you dispense, the less you'll get paid for it!

I'm not going to reproduce all the calculations here, but these cuts overall amount to 36% of gross profit on dispensing business to the average pharmacy.

Please, if you rely on pharmacies at all, ever, or if anyone in your family does, please pay a visit to your local pharmacy. Talk to the pharmacist. Ask him or her to tell you the impact of these cuts. Ask them to tell you, for a few sample prescriptions, how much the drugs cost to buy in, how much they used to be paid, how much they'll be paid in the future. And if you still think we're all a bunch of greedy sods when you've done that, come back and let me know.


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## Complainer

locum-motion said:


> 3. Over the counter medicines. There is price competition, but not a huge amount of it, for various reasons. Mainly, remember that medicines are not ordinary items of commerce. If I run a bike shop, I'm going to try to sell you the fanciest, shiniest bike I can, with lights and bells and a new helmet. If I'm selling you a medicine, I'm trying to sell you what will make you better and/or relieve your symptoms. There are ethics and laws involved. We only sell you 12 or 24 paracetamol tablets because that's what the law says, and in any case, as the package says "If symptoms persist, consult your doctor". If your headache hasn't gone after a day or two on paracetamol, there's something more serious wrong that needs to be checked out. We can't sell you a jumbo pack because a) it's illegal and b) it's unethical.
> A packet of Solpadeine sells for the same price - give or take a few cent - in almost every pharmacy. Those words "give or take a few cent" are very important. We all buy them off one of the same three wholesalers, or perhaps through the manufacturer's sales rep, for the same invoice price. We all want to make a profit when we sell it, and most of us have approx the same percentage in mind. Differences arise because:
> a) different pharmacies get different amounts of discounts from the wholesaler depending on the size of their account.
> b) the pharmacy may decide to pass all, none or some of this discount on to the customer.
> c) some may decide to aim for a slightly higher or lower percentage profit depending on the affluence or otherwise of their location.
> d) some may decide to round the price up or down a few cent for convenience's sake.
> 
> Either way, look around for the price differences. They might not be very big, but they are there. (Somebody gave the example of a huge difference in Zirtek liquid. I don't have any price lists in front of me, so can't look up either of the prices, but it was a massive difference. Are you sure the two bottles were the same size?)
> 
> Incidentally, the pharmacist is perfectly entitled to make as large a profit as s/he thinks they can get away with on these items. A pharmacist is the only person in any kind of shop that I can think of who will actually _turn down_ a sale and sell you nothing if they think that that's what's best for you. Why not make a profit when they _do_ sell something?


THanks for the detailed response, Locum. I'd have to challenge you and say that the attributes of the market for OTC products really doesn't seem that different to many other retail markets. Most other retailers face similar restrictions, but there does appear to be much more variety of prices in those markets.

I think much of frustration of customers comes from a feeling that the pharmacist is part of the problem, not part of the solution. Is the pharmacist doing everything possible to get better value for the consumer. For example, why aren't pharmacists pushing 'pill splitting' (as they do in the US) as one simple way to get better VFM.


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## bananas

My daughter is on a regular monthly prescription for Respiridone.  It costs about €29.  Her doctor suggested to me recently that I should ask for the generic version as it would be a good bit cheaper.  Delighted I did so-the cost was €27.50!!!!

Can a pharmacist explain that to me? I was hoping for a decent saving.


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## Fatphrog

bananas said:


> My daughter is on a regular monthly prescription for Respiridone.  It costs about €29.  Her doctor suggested to me recently that I should ask for the generic version as it would be a good bit cheaper.  Delighted I did so-the cost was €27.50!!!!
> 
> Can a pharmacist explain that to me? I was hoping for a decent saving.



That's a decent percentage decrease. The reason it's not more is probably because the maker of the branded product is charging a reasonable price for a product that they invented and spent a lot of money developing.


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## Complainer

Fatphrog said:


> That's a decent percentage decrease. The reason it's not more is probably because the maker of the branded product is charging a reasonable price for a product that they invented and spent a lot of money developing.


Why would the pharmacist not have given her the cheaper generic drug in the first place?


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## Purple

Complainer said:


> Why would the pharmacist not have given her the cheaper generic drug in the first place?



Good question. The generic version only comes out when the drug is out of patent. At that stage generics manufacturers such as Merc start to make the cheap versions and many of the big players just drop the product completely (depending on what they have in the development pipeline). 
AFAIK pharmacists are required to offer the generic first (if no brand name if specified) but if a doctor specifies the branded product then it can be given.

The reason that Mary Harney cut the payment to pharmacies was to force them to get from lower prices the wholesalers. In practice this is happening as the wholesalers are giving better discounts. My mother in law is a pharmacist, running a pharmacy for the owner. The profits they make are astounding but cosmetics are just as lucrative as drugs.


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## locum-motion

bananas said:


> My daughter is on a regular monthly prescription for Respiridone. It costs about €29. Her doctor suggested to me recently that I should ask for the generic version as it would be a good bit cheaper. Delighted I did so-the cost was €27.50!!!!
> 
> Can a pharmacist explain that to me? I was hoping for a decent saving.


 

This question has been asked and answered.
I've explained above precisely how the prices (both invoice price and selling price) are reached.
It should be obvious that if there was a bigger difference between the invoice price for the generic product and the proriaetary product, then there'd be a bigger saving for the consumer.


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## locum-motion

Complainer said:


> Why would the pharmacist not have given her the cheaper generic drug in the first place?


 
Name of ingredient = risperidone.
Name of proprietary Product = Risperdal (Registered trade mark)

If prescription says Risperdal, then Risperdal must be dispensed. _This is the law._
If prescription says risperidone, then pharmacist can dispense any brand of risperidone (generic or proprietary) that they happen to have on the shelf.
Pharmacists have been asking for the legal right to make generic substitutions for years. Continually refused by the Govt.
Hmmm, I wonder why. Maybe it has something to do with all those factories in Ringaskiddy and elsewhere!

Has anyone taken my advice yet about talking to their local pharmacist? Let me know how you get on, if you do.


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## locum-motion

Purple said:


> At that stage generics manufacturers such as Merc start to make the cheap versions and many of the big players just drop the product completely (depending on what they have in the development pipeline).


 
Merck (not Merc) isn't a generics manufacturer.
Merck Sharpe & Dohme is one of the big boys, along with the likes of Pfizer, Schering Plough etc.
The main generics manufacturers in the Irish marketplace are Clonmel Laboratories, Gerard Laboratories and Pinewood Laboratories.

Otherwise, not a bad answer, Purple. You're putting the cart before the horse a little. See my answer to the same question.


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## locum-motion

Complainer said:


> THanks for the detailed response, Locum. I'd have to challenge you and say that the attributes of the market for OTC products really doesn't seem that different to many other retail markets. Most other retailers face similar restrictions, but there does appear to be much more variety of prices in those markets.


 
Examples, please?


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## gearoid

Locum-Motion, Thanks for the very detailed responses.

Just thought the following was relevant. For the full detail go to the website.

From the Competition Authority report findings published today at http://www.tca.ie

• It is customary for pharmacies to charge a 50% mark-up on all
private prescription medicines. Every pharmacy knows that to
deviate from this will encourage prices to fall. In the case of DPS
patients, this is underpinned by a State guarantee of
reimbursement of that degree of mark-up. Furthermore, *it has
been suggested that ROI pharmacies rarely stray from the
recommended retail price (RRP) for non-prescription medicines;*

6.21 Cheaper generic prescription drugs are used more frequently and ownbrand
pharmaceuticals are more commonly available in the UK.

6.22 It has been suggested that, compared to the UK, independent ROI
pharmacies rarely deviate from the recommended retail price (RRP) for
non-prescription medicines.

Concluding Comment

6.45 However, the State also has the aim of ensuring that healthcare
delivery is efficient and cost-effective. *The 50% mark-up paid to
pharmacies for medicines dispensed under the DPS and LTI schemes is
among the highest in the EU. While pharmacies, like all retailers in the
ROI, face higher costs of doing business here, a 50% mark-up is not
justifiable. This is especially true when one considers the substantial
discounts pharmacies receive from wholesalers. It is perhaps not
surprising that the ROI has so many pharmacies compared to its small
population.*


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## locum-motion

gearoid said:


> Locum-Motion, Thanks for the very detailed responses.
> 
> Just thought the following was relevant. For the full detail go to the website.
> 
> From the Competition Authority report findings published today at http://www.tca.ie
> 
> • It is customary for pharmacies to charge a 50% mark-up on all
> private prescription medicines. Every pharmacy knows that to
> deviate from this will encourage prices to fall. In the case of DPS
> patients, this is underpinned by a State guarantee of
> reimbursement of that degree of mark-up. Furthermore, *it has*
> *been suggested that ROI pharmacies rarely stray from the*
> *recommended retail price (RRP) for non-prescription medicines;*
> 
> 6.21 Cheaper generic prescription drugs are used more frequently and ownbrand
> pharmaceuticals are more commonly available in the UK.
> 
> 6.22 It has been suggested that, compared to the UK, independent ROI
> pharmacies rarely deviate from the recommended retail price (RRP) for
> non-prescription medicines.
> 
> Concluding Comment
> 
> 6.45 However, the State also has the aim of ensuring that healthcare
> delivery is efficient and cost-effective. *The 50% mark-up paid to*
> *pharmacies for medicines dispensed under the DPS and LTI schemes is*
> *among the highest in the EU. While pharmacies, like all retailers in the*
> *ROI, face higher costs of doing business here, a 50% mark-up is not*
> *justifiable. This is especially true when one considers the substantial*
> *discounts pharmacies receive from wholesalers. It is perhaps not*
> *surprising that the ROI has so many pharmacies compared to its small*
> *population.*


 
Thanks, Gearoid. Yes, I had heard about that report, and it says precisely what one would expect from Mary Harney's lapdogs!

(By the way, please indicate whether the *bold type* is your emphasis or if it appeared in the original report. I believe that it is customary to do so.)

All of those who constantly mention the 50% (by that I mean: HSE, Competition Authority, Minister for Health and Children, Department of Health and Children etc.) always conveniently ignore the fact that _we only get 50% on 26% of the stuff we dispense._ The impression is always firmly left in the reader's mind that we get 50%, and a fee, on everything. As far as I'm concerned, the 50% _is_ too high, but 0% on the other 76% is too low!

I stand over this assertion: the GMS would have collapsed years ago if it weren't for 2 things: The fact that getting 50% on the other schemes kind of makes up for it, and that whatever discount one gets from one's wholesaler allows a few percentage points of profit to be made.

Gearoid,
At this point, I believe that I have answered every question fully and honestly. Yet to almost every response I (and others) have made, you've tried to turn it around by throwing out quotes and/or statistics out of context etc. I now believe you to be a flamer. It's not outside the bounds of possibility that you are a HSE/DoHC plant. You apparently have made up your mind. You have conceded that my posts were detailed and comprehensive. Every fact I have put in is easily verifiable. Neither you nor anyone else has challenged me on the veracity of my posts. But yet you persist.
I am now going to contact the moderators of this site. I will ask them to review the posts hereon, and let me know if they agree to my assertion that the questions have been answered. If they do agree, I will ask them to lock the thread.


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## gearoid

1. I included the link to the Competition Authority report in case others were unaware of it. Yes I bolded small parts of the summary but I gave the original link. I was unaware of any etiquette issue in doing so.

2. I thanked you for your posts. I was simply pointing out the considered judgements in the Competition Authority report that there is a lack of competition in the market. I agree with this assertion.

3. Some of your comments were less than fair. You say I'm a flamer but you use Maoist style insults such as "Mary Harney's lapdogs!". Read the report. It would come across as balanced and fair.

4. This is a discussion, not you providing facts and deciding that you have informed us of the correct position. 




> I now believe you to be a flamer. It's not outside the bounds of possibility that you are a HSE/DoHC plant.


Show a bit of courtesy. Ask me whether I have a vested interest or not.  I work in IT, and have no connection to the HSE. I am a taxpayer and a voter and above-all a consumer and I don't believe we should be funding guaranteed mark-ups in a semi-competitive pharmaceutical sector out of the public purse. I support the cuts by the Government. There are better ways to spend our money at a time of national crisis. 

I am not a "flamer" as you put it. I disagree with your some of your arguments but I thanked you for your informational posts.


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## locum-motion

gearoid said:


> 1. I included the link to the Competition Authority report in case others were unaware of it. Yes I bolded small parts of the summary but I gave the original link. I was unaware of any etiquette issue in doing so.
> 
> 2. I thanked you for your posts. I was simply pointing out the considered judgements in the Competition Authority report that there is a lack of competition in the market. I agree with this assertion.
> 
> 3. Some of your comments were less than fair. You say I'm a flamer but you use Maoist style insults such as "Mary Harney's lapdogs!". Read the report. It would come across as balanced and fair.
> 
> 4. This is a discussion, not you providing facts and deciding that you have informed us of the correct position.
> 
> 
> 
> Show a bit of courtesy. Ask me whether I have a vested interest or not. I work in IT, and have no connection to the HSE. I am a taxpayer and a voter and above-all a consumer and I don't believe we should be funding guaranteed mark-ups in a semi-competitive pharmaceutical sector out of the public purse. I support the cuts by the Government. There are better ways to spend our money at a time of national crisis.
> 
> I am not a "flamer" as you put it. I disagree with your some of your arguments but I thanked you for your informational posts.


 
Thank you. Perhaps I overreacted a bit, because I was angry.
Maybe it's not the case, but it _did _seem to me last night that you weren't going to be satisifed no matter what I said. I have by now spent about 3-4 hours of _my_ time typing up these answers, and just when I thought I'd finally covered everything you pulled out that report. It's very frustrating!
I didn't realise that it was Maoist to refer to somebody as Mary Harney's lapdogs; I'll have to remember that, it's a good one. I happen to think it's true, though. The CA is not acting independantly as it should; the very fact that that report was published just as pharmacies are about to have their payments slashed speaks volumes.
And, as I have stated before, the report is misleading in that it leaves any reader who doesn't already know different with the impression that we get 50% mark-up on everything.
If you get 50% mark-up on 26% of what you sell, then that's equivalent to a 13% mark-up overal. You won't see the CA, the HSE or the DoHC referring to that figure, as it doesn't suit their agenda to have the public realise that that's how much we get paid. It suits their agenda to have the public think we get paid 50% on everything.

Oh, and by the way, I think the word I actually meant to use was troll, not flamer.


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## gearoid

Locum-motion,
I wish I had time to flame or troll. No harm done. I think a bit of bolshy behaviour and questioning by the consumer would be good for the country.
Gearoid


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## Complainer

locum-motion said:


> The CA is not acting independantly as it should; the very fact that that report was published just as pharmacies are about to have their payments slashed speaks volumes.


Maybe we should have more than one CA?


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## Brendan Burgess

This thread has covered all the issues already.


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