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Computachem
E-Newsletter
Editor:
Neil Johnston
Regular Contributor:
Rollo Manning
The Third Guild/Government agreement has been completed
and the winners and losers are sorting themselves out. Professional development
appears to be a clear winner, while the distributive component of pharmacy
has lost ground. At least there is stability assured for a further five
years, when the predators will again attack the issue of pharmacy ownership.
One important group of losers were the medical centre pharmacists, who
are still unable to gain approval numbers, despite their important patient
catchment. This in an era when pharmacists are being encouraged to interact
with health professionals, especially doctors. If pharmacists are to provide
medication management appropriate to a patient's needs, through team-based
care, it seems odd that the National Health component is missing. It would
appear that approval numbers will still remain an unnecessary restraint
on pharmacists wishing to service a niche market, with the result, all
of pharmacy remains uncompetitive. The sooner approval numbers disappear,
the better.
On the other side of medical centres, it appears that a number of entrepreneurial
corporations are buying up doctor practice companies, as there is little
regulation concerning number and ownership. Some pharmacists are finding
the going rough as these newer entities, responsible only to shareholders,
see pharmacy as a soft touch, and creatively find ways to elevate rents
and service fees to brutal levels. While these newer entrants are bringing
new management methods, by embracing technology in all forms, they have
the effect of suppressing individual doctor practices in the locality.
However, most doctors contracting to practice companies appear satisfied
with their hours and remuneration, some even sharing a percentage of the
profits. One operator is reputed to be designing an automated script writing
and dispensing system to eliminate "leakages" and maximise return (rental
percentage), despite the fact that this would be channelling.
These new "mega-practice" corporations plan to list publicly and in so
doing, will bring a new dimension to the medical and allied health professions.
They will obviously be near the top of the queue when pharmacy practice
ownership comes up again, along with the local supermarkets and the global
retailers with their already established chain pharmacies in other countries.
The medical centre issue and other aspects of the third Guild/Government agreement are the topic of Rollo Manning's article for this edition. Study it carefully.
GST is now only a few weeks away and most of us would wish that it would go away. Any pharmacy that has not installed an efficient book keeping system had better make a hurried purchase. At Computachem we have settled on QuickBooks, and find it an excellent system, but there are many others you can spend your GST voucher on. If you have not been notified of your BSB number, then you should telephone the ATO as soon as possible. Have fun!
Third Agreement - the good news and the bad
A minimum of fuss has surrounded the announcement of the
outcome of the Third Community Pharmacy Agreement negotiated by the Pharmacy
Guild and the Commonwealth Government. At the time of this newsletter
being released the sounds of discontent are growing as the "medical centre"
lobby steps up it's concern. The report of the National Competition Policy
review of pharmacy regulation called for the following:
"(That) Approvals, for Pharmaceutical Benefits Scheme (PBS) purposes,
of pharmacies located in eligible medical centres, private hospitals and
aged care facilities, and intended to serve those facilities, are considered
without reference to the distance of a given facility's site from the
nearest existing pharmacy;" (Recommendation 13).
The "Third Agreement" only makes mention of the "private hospitals and
aged care facilities", in considering how Section 94 of the National Health
Act may be used to cover approvals for privately owned pharmacies. The
Guild publicity machine would have the observer believing the recommendations
of the NCP had been fully covered. This is not the case as seen by the
"medical centre pharmacy" location issue.
The one cent increase in dispensing fee from July 1 will not worry the
Federal Treasury, nor the $11 million to be divided up according to script
volume. In a Budget where the total surplus was about $1 billion less
than the total cost in a year of the PBS, it did not take the pharmacy
measures much to stand out. The Third Agreement is significant for two
reasons:
1) The Commonwealth and the pharmacy lobby know exactly where they stand
over the next five years in terms of remuneration. The Government knows
its outlays, and the pharmacy knows it's level of remuneration. Like it
or not, if a pharmacy wants a slice of the bigger cake, it will have to
earn it through professional development. The Pharmaceutical Benefits
Remuneration Tribunal may as well take a holiday for five years with all
the hard decisions taken in the context of the Third Agreement negotiations.
The Guild has spoken on behalf of all parties, and the bitterness of the
1970s and early 1980s replaced with conciliation and the need for pharmacists
to have to earn increases in remuneration through professional activity.
This is a factor the NCP review of pharmacy regulation would be pleased
about, improved standards linked to dispensing remuneration contracts.
2) The strengthened position of the Pharmacy Guild of Australia. With
an appropriation of $7.5 million over five years to "administer" the "Agreement
Management Committee", the Guild will have every other pharmacy interest,
including the PSA, coming to it for support and funding. This is no doubt
good for the Guild, and the five year term of the Agreement will tell
if it is also good for pharmacy. The challenge for the Guild will be to
guide the $416 million professional development program and keep all factions
satisfied with the outcome. It is to be hoped the PSA can come to a partnership
arrangement with the Guild in determining the direction of the Program.
Failure to do this could lead to the extinction of the organisation which
for over 100 years has guided professional development in Australian pharmacy
through the State based organisations. The cost of Reviews The evergreen
advocate for the "pharmacy profession", the trade press, is concerned
through it's pages at the cost of making submissions to Government reviews.
Given that a National Competition Policy review requires the advocates
for retaining anti-competitive regulation to convince the review of the
public benefit, maybe the cost reflects the difficulty of the argument.
Remember it is NOT for the reviewer to show why deregulation should take
place, it is for the industry to show why it should not (for the public
benefit). If the Pharmacy Guild and the Pharmaceutical Society (a joint
submission to both COAG reviews) had spent say $1million to make the case
to the COAG review, it has to be asked could the argument have been won
with a $100,000 submission. In other words, did the levy on pharmacists
have to be $1000 or could a $100 levy have told the same story? Was a
six volume (21 cms high) submission really needed and at what cost ? The
reviewer was an "independent" person, albeit a pharmacist, so did the
Guild/Society feel overly nervous about the likely outcome that it cost
so much to mount the argument for retention of existing regulation. Before
criticising Government for "requiring" organisations to spend big dollars
on submissions, maybe it would be an idea to analyse the benefits of the
submission against the cost. Only after that could a commentator say the
cost was justified. If the argument was so complex it required a huge
cost then maybe the following quote on the need for change is worth reflecting:
"Change is necessary when the cost of the pain of the existing regulation,
exceeds the cost of the pain of the proposed deregulation." The cost relates
to the consumer of the service.
GENETIC TEST FOR HIGH BLOOD PRESSURE
A biopharmaceutical company called Myriad Genetics has developed
a genetic test for the detection and management of high blood pressure.
Based on the angiotensinogen (AGT) gene, which is common in hypertensive
patients, the test (called CardiaRisk) can detect whether an individual
has the gene and specific mutations. It can then be used to inform patients
as to how their condition is best treated say, with salt reduction or
by the use of an ACE inhibitor. People with this type of mutation (known
as single nucleotide polymorphisms or SNP's) tend to have high levels
of protein in their bloodstream. Researchers are hoping to tailor drugs
to individuals and develop some very precise treatments. The test not
only points to the best type of drug for treatment but also the optimum
dose for each patient. CardioRisk costs US$ 395 and is covered by some
medical insurance companies.
Myriad has a number of other patents on the BRCA gene which is strongly
associated with breast cancer, also the p16 gene which can assist doctors
in determining the diagnosis, prognosis and predisposition for breast,
brain, skin, thyroid, ovary, uterus, kidney and stomach cancers. Currently,
all screenings take place at Myriad because of their expertise. Pharmacists
need to be aware of these screening tools, as they will have application
in the Consultant Pharmacist area, as they become more available and user-friendly.
Forrester Research, an American survey group, have released
a report stating that most American doctors view the Internet as a waste
of time. Considering the amount of money being invested in e-healthcare,
doctors going online (or not) have powerful implications for public health
outcomes. A recent American Medical Association survey of its members
showed that fewer than 40% of doctors use the Web as part of their practice.
Most have a personal e-mail address but do not use it routinely in their
clinical practice and regard it as an additional, unpaid burden, additive
to their daily routine. Unlike solicitors and accountants, doctors are
unable to bill for e-mail consultations.
The Forrester survey identified that 72% of doctors would not respond
to patient e-mails in the future and 19% stated that they would only do
so if compensated. Consumer oriented health websites were also considered
a nuisance and time wasting, particularly when doctors were requested
to read printouts produced by patients. There is divided opinion as to
what to believe and where to go for good information, but physician-only
sites are gaining in use and popularity. Despite the initial results,
the American Medical Association believes that widespread use of the net
by doctors is not too far off. The reasons for this optimism are the development
of quality continuing education on the Net, electronic medical records
(identified by Forrester), which will save time by reducing paperwork,
plus increased efficiency with quality of care.
"Prescription medicines from overseas pharmacies without
a prescription." Is a statement appearing on a pharmaceutical website,
which clearly breaches most drug laws in western countries. The high traffic
from American consumers to this site has attracted the attention of the
American Food and Drug Administration, because online sales of pharmaceuticals
(from all sources) are now estimated at $19 billion. Drugs such as Viagra,
Propecia and Xenical are being used without proper professional supervision.
The name of the site mentioned is http://www.Hair2Go.com,
and it is still operating with impunity.
Why? Well it happens to be a New Zealand site and cannot be touched by
American officials. The National Association of Boards of Pharmacy estimate
that at least 200 U.S-based web sites offer prescription drugs without
a prescription, and no solution as to how these sites can be regulated
appears to be in the offing. The more pressure put on unethical sites,
the more they move out of reach overseas. Customs seizures of drugs now
run at 400% above the previous year.
Some sites, such as http://www.KwikMed.com
offer a supposed online medical consultation. The type and depth of questioning
is such that a proper investigation simply cannot occur. Consumers may
even be billed a separate fee for this type of service, but obviously
still see benefit in getting their discount Viagra under these conditions.
The Department of Justice is now considering jail terms for people purchasing
from such sites and is also seeking powers to block related financial
or credit card transactions, so as to damage the ability of offshore sites
to function. However, there are some that consider such measures too draconian
and do not wish to see business fettered with extra regulation. Those
arguing against, claim that the threat is simply that regulators have
lost power, and while supposedly protecting the public from fraud, are
really giving justification for any government agency to regulate the
Internet as well. As the proposals submitted call for administrative subpoena
power and civil monetary penalties that do not exist in the offline world,
why should they be put in place just for the online businesses? The Internet
Prescription Drug Sales Act is still being debated and the arguments for
and against are sure to find their way into Australian legislative thinking
sometime.
One would think, given the size of the processed foods market,
groceries would be a natural for Internet shopping. The chore of the weekly
"shop" with the effort of having to lug heavy shopping bags home, plus
the fight for a car park space at the supermarket complex, should attract
some interest from the sheer convenience aspect.
Survey firm Jupiter Communications states that by the year 2002, American
Internet grocery sales will total $3.5 billion-less than 1% of total grocery
sales. Despite this fact, Woolworths have opened their first Homeshop
Internet site in Sydney, while Coles have chosen Melbourne to launch their
Coles Online Internet venture. Franklins are yet to announce their plans
for the Internet. These three companies account for 80% of the total of
processed foods sold in Australia. The establishment of alliances marks
these particular Internet developments. Joint development with other major
companies, who are expanding their Internet presence, creates a mutual
opportunity for consumer education and market cross-fertilisation. Woolworths
has formed an interesting alliance with the Commonwealth Bank, which has
begun rolling out its' Ezi-Bank concept, placing a Commonwealth Bank kiosk
outlet in every major Woolworths store. This process enables consumers
to obtain money to spend on shopping or other needs, in the middle of
a major shopping environment. As full-scale bank branches desert shopping
strips and centres, particularly in rural areas, this type of development
becomes significant. As access to finances is an essential, the opportunity
to educate people generally to e-commerce begins with such a banking process
and the link is only a short distance from developing confidence to pay
for goods by an Internet process. Bricks and mortar presence is now regarded
as essential for a successful Internet business and Woolworth's entire
strategy is to have e-commerce as an extension of its physical business
rather than as a separate cyberspace entity as Coles have done. My money
is on Woolworths to come up with the better result long term, and pharmacists
looking for a model would be advised to study Woolworths progress, particularly
as that company is the most aggressive in terms of wishing to own pharmacies
in its own right. They have not given up the fight and will use every
initiative, including the Internet; to strip markets away from pharmacy.
The Pharmacy Guild has been negotiating with a number of banks in an endeavour
to create an agency or sub-branch system to be allied with pharmacy. This
appears to be a sound move, particularly if it is tied to Internet payment
systems as a means of expanding pharmacy's online presence.
One of the most successful food retailers online is
http://www.greengrocer.com.au. It is a veteran; having started in
1997 and currently has a full time staff of four, with approximately 30
casual staff and a current registered customer base of 15500. The process
is relatively simple. All orders are placed on the website and paid for
by credit cards. They are computer collated at midnight, and the collated
information is forwarded to a buyer, who purchases the exact numbers of
apples, oranges etc from the Sydney markets, and delivers them to a central
distribution centre (which will be eventually located at Lidcombe). The
collated order is the first piece of paper available from the system.
Couriers deliver client orders in the afternoon. Woolworths and Coles
Internet activity have actually stimulated business for greengrocer.com.au
because customers behave similarly to the bricks and mortar world by purchasing
dry goods from the supermarkets and fruit and vegetables from a specialty
outlet.
Most Australian Internet retailers agree that they have to perform a considerable
amount of work to get their model right, particularly in the area of product
mix, and attracting sufficient funds for marketing requirements, building
technology and getting orders filled. In America, The Boston Consulting
Group has reported that 28% of all attempted online purchases failed,
and that 80% of online consumers experienced at least one failed purchase
attempt over the past 12 months. Failures resulted from technical problems
of vendor sites, difficulties in navigating the site and finding products,
and the logistical problems of delivery after the sale. Research also
showed that consumers would be inclined to purchase more online if they
could interact with a customer service representative. One report indicated
that for 50 top US retailers, 56% failed to respond to e-mail within 48
hours and 26% never responded. A further 36% had busy toll free numbers
and did not provide helpful assistance on the phone. Technical problems
were experienced by 25% of customers trying to place an order, 14% of
goods arrived late and 6% did not arrive at all. It is obvious that the
provision of good customer support would not only develop credibility
and loyalty, but would also ease pain in areas of return of goods. Research
indicates that a consumer's first online purchase experience is critical.
Satisfied customers spend an average of $500 and conduct 12 online transactions
over a 12-month period. Dissatisfied customers spend an amount of $140
spread over four online transactions. Because of problems noted, more
than 88% of shopping carts were abandoned. Researchers point out that
winning online customers requires building trust, providing free added-value
services, providing only quality products and services, a user-friendly
site plus competitive prices. Even more on the Net, the "customer is always
right" because net shoppers don't care about "one click shopping" or personalised
enhancements. They want price discounts, free delivery, and guaranteed
transaction security. It is worth noting that free delivery was found
to influence 90% of online shoppers, with 63% indicating that they would
prefer to shop at a site with free delivery than at one offering well-known
brands.
Pharmacists should take note that they are well placed to fulfil all the
above criteria, as they are used to providing high quality, value-added
products and services. A"trust" factor is already in place, identified
over many years through the Gallup Poll. Therefore the Internet should
be viewed as a positive to win new customers, patients and market share.
All the basic elements are in place, except perhaps for the technology,
which needs to assume a priority if competition is to be sustained.
* It appears that the Taxation Office may reduce some of
its restrictions for a tax invoice in respect of corporate credit cards.
A recent draft ruling states that where an entity holds a corporate credit-card
statement, a separate tax invoice is not required.
* Pricing remains topical and the ACCC has weighed in with a pricing guideline
publication. A maximum increase for prices has been set at 10%, with all
sorts of dire consequences promised for transgressors. Just as we take
this on board, the Australian Financial Review (26th May edition) has
reported the treasurer as saying that a "business could increase its prices
by more than 10 percent on July 1st, if this was attributed to higher
input costs, exchange rate fluctuations or simply a wider profit margin."
Mr Costello went on to say that companies would only breach the law if
they attribute these price rises to the GST.
It's nice to have a clear-cut decision and to know that Professor Fels
at the ACCC does not have a very big stick?
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* Looking for an organised reference site for medical or other references?
Why not try (and bookmark) the Computachem Interweb Directory , for an
easily accessed range of medical and pharmacy links, plus a host of pharmacy
relevant links. The directory also contains a very fast search engine
for Internet enquiries