Times are getting tough for vested interests. The days when powerful sectors could hold the state and society to ransom may not be over yet, but dark clouds are lurking on the horizon. Last week it was the turn of pharmacists, one of the plethora of groups servicing the health sector. Boots announced that the 10 most expensive prescription drugs were to fall in price by an average of 25%. This, it is estimated, will save people using medications for conditions such as asthma and heart disease up to €300 per year.
Within 24 hours of Boots making the announcement, Sam McCauley, a rival chain, announced that it would also provide better value for money. Prices in its 26 Irish outlets are set to drop. Thus there appears to be the makings of something akin to a price war. The times, they are a-changin’.
Some may find it difficult to believe that pharmacists are feeling the pinch. In a small corner on the northside of Dublin with which I’m familiar, three bright and shining new shops have opened in the past two years — at a time when the retail sector is bouncing along the ocean bed of a deep recession. Obviously, there is a market for these pharmaceutical outlets, and, of course, it is a positive development to see any new shops open, particularly ones that are independently owned and run.
The Irish Pharmacy Union confirmed this trend. At the end of 2011, there were 1,757 outlets in the country, an increase of 29 on the previous year. Despite the recession, there is obviously still plenty of business for pharmacists.
Price wars and competition are not matters with which this gilded sector is familiar, however. They have traditionally presented themselves as being motivated primarily by the public good, with precious little interest in filthy lucre.
Advertisement
In this, pharmacists are not alone. Medical professionals have always pitched their resistance to reform of contracts and work practices as being driven first and foremost by concern for patient care; the legal business has resisted new practices on the basis of concern for citizens’ rights; publicans used to wail about the loneliness of the hill farmer in the days before drink-driving was taken seriously. No sector comes straight out and admits that reform will deplete its — usually excessive — profit levels and this is why they are all against it.
Similarly, pharmacists were adept at manoeuvring things to ensure that competition was a dirty word. Up until a decade ago, regulations dictated that the sector remained sheltered. For instance, it was not possible to open a shop within a set distance — about a mile — of another. In this, the pharmacists were in the same boat as their kindred spirits, the publicans: both pubs and pharmacies were insulated from any competition that might impinge on their enormous profits from selling drugs.
Change has come slowly. While the government deregulated the pharmacy sector in 2002, it retains considerable clout. What has changed is that a combination of the recession and the EU/European central bank/International Monetary Fund troika is forcing the government to take on powerful vested interests. Three years ago, when this recession was but a pup, the pharmacy sector gave an indication of the lengths to which many of its members would go in order to protect their profit levels.
Mary Harney, then the health minister, moved to cut payments to pharmacies through the community drugs scheme by €133m. In many cases, there was a 50% mark-up on the drugs dispensed. In the decade prior to 2008, the state’s drugs bill had increased from €330m to €1.6 billion, and the dispensers’ cut had received a corresponding boost. From the outside, the scheme certainly had the appearance of gravy all the way.
The response from the sector was swift. Immediately, it was declared that patients, not pharmacy owners, would be the big losers. Frontline services would be devastated because pharmacists simply could not take such a hit to their incomes. It was projected as a matter of patients before profit.
Advertisement
We were told 5,000 jobs would be lost in the sector. Shops would close. The elderly, the weak, the sick would be forced to travel great distances to get vital medicines. Those who required drugs to fight addiction would have to suffer the pain. More than half of the 1,500 outlets contracted under the community drugs scheme threatened to withdraw from the service.
The change duly came, the threats receded, and everybody got on with things. Job losses in the sector were minimal. After a few months’ living in fear, the elderly, the sick and those who required prescription drugs from the state were able to relax. The stress and fear imposed on them began to dissipate.
What the whole affair did expose was the lengths to which powerful vested interests were willing to go in order to protect their incomes. The high-minded waffle about concern for patients was exposed as just that. At the end of the day, it really was all about the filthy lucre.
Since then, the sky has not fallen in on pharmacies. Figures supplied by the Irish Pharmacy Union suggest one-fifth of pharmacists made a loss in the past two years, but caution should attach to any such surveys conducted on behalf of representative organisations.
For anybody interested in the common good, the prospect of a price war in the pharmacy sector can only be positive. More importantly, it is also the latest indication that the days when powerful vested interests could fleece the rest of us may be numbered. A similar story is emerging in other sectors as the government is forced by the troika to rein in those who have supped long and fruitfully at the expense of the public. What a pity it has taken an outside body interested only in economics to force the government to care more for its citizens than for vested interests.
Advertisement
As for the pharmacists, the impending price war is coming from within the sector rather than being imposed from without. Perhaps some canny operators will sniff the wind, and realise that things are not as they used to be in the good old days of prime gravy.
One of the greatest examples of an Irish solution to an Irish problem is the funding of political parties. Following exposure in tribunals about the unhealthy and corrupt — moral if not legal — interaction between business and politics, laws have been in place for a decade now requiring scrutiny of political donations.
Last week we had the annual joke of the Standards in Public Office Commission report into funding revealing none of the main political parties had anything worth declaring in 2011, an election year. By now, all of the parties have perfected a strategy of collecting money under the radar of declaration thresholds, and the commission is tearing its hair out at the redundancy of the law.
So what’s left for it to do but, as its spokesman said last week, pursue a prosecution against the Communist party for failing to make a statutory declaration? The poor impoverished commies are feeling the long arm of the law, while the main parties sit back and laugh as the dough rolls in.