Pharmacy freeze in Temuka

Around 5000 people from the South Canterbury town of Temuka may soon be left without pharmacy services.

The town is witnessing a stalemate as the lone pharmacy there refuses to sign the interim pharmacy agreement.

Pharmacist Allan Campbell says he cannot sign a document that gives pecuniary advantage to the local DHB at the expense of his business.

Mr Campbell has been at loggerheads with the South Canterbury DHB since last year over what he claims $80,000 worth of annual loss he is incurring simply by dispensing funded medicines.

Unless the DHB resolves the issue, he says, he can no longer continue. The DHB has rolled over his old contract until 15 April and has told Mr Campbell to sign the new contract by then or be left out.

“I will simply switch the computer off on 15 April. The patients will have to pay the full price for their medicines. They can go ahead and send individual invoices to the DHB for reimbursement,” Mr Campbell says angrily.

Armed with the Pharmac schedule and a stack of original invoices issued by his wholesaler, he quotes figures to insist he is losing from 4% to 6% on items dispensed. The average loss of about 80 cents on each item adds up over the year.

For all funded items, Pharmac reimburses the scheduled price and a 4% wholesaler mark-up. Mr Campbell shows invoices to claim his wholesaler charges him the scheduled price plus a mark-up of 10% for all medicines that cost up to $5 and a 8.65% mark-up for anything costing above that.

“If I dispense two packs of insulin Humalog to a patient, the loss almost nullifies the dispensing fee,” he says.

The larger issue of pharmacy margins came up nationally when Pharmac switched funding from Losec to Dr Reddy’s Omeprazole. DHBs argued pharmacists make money on some drugs while not on others, which balances out over a period and pharmacists get rebates from wholesalers, which are not reflected in the figures.

For his case, Mr Campbell has produced what he calls a random list of 50 medicines dispensed on a typical March day (see here), and says the loss on each of those items is anywhere from just a few cents to more than four dollars.

The South Canterbury DHB has asked for that list for verification.

On the issue of rebates, Mr Campbell says there is no consistency as rebates are dependent on the volume of drugs ordered.

If he carries out his threat to stop the supply of funded medicines from 15 April, around 5000 people from within and around Temuka could be left without pharmacy services. The nearest town, Timaru, is 15 minutes’ drive.

Temuka’s predominantly elderly population uses mobility scooters to get around and a return taxi trip can cost $30.

Chris Fleming, chief executive of the South Canterbury DHB, however, assures it will not come to that.

“We remain hopeful the issues will be resolved as soon as possible,” Mr Fleming says, adding, “Should it become necessary, South Canterbury DHB will need to consider alternative solutions to safeguard the supply of pharmaceuticals to Temuka’s population.”

Opening a rural depot to dispense funded medicines may not be an option due to the volume of scripts dispensed everyday. And the DHB says it will not consider the option of individual patients paying full price to Temuka Pharmacy and sending the invoice for reimbursement.

The only other option would be to open a new pharmacy and that could raise more than a few hackles.

Mr Fleming says the contract Temuka Pharmacy has been offered has been developed after extensive consultation through national processes and is the same offered to all pharmacies both in South Canterbury and nationally.

On the core issue of pharmacy’s losses, he says, he does not want to comment further while the DHB is still working with Mr Campbell to resolve the issue. RK

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