ComCom sends warning letter to DHBs, pharmacies

commission chairman Mark Berry

The Commerce Commission is warning District Health Boards (DHBs) and pharmacies across New Zealand that “no discounting” clauses in the 2012 Community Pharmacy Services Agreement  (CPSA) are likely to have breached the Commerce Act 1986.

The Pharmacy Guild of NZ has also been warned for its role in advocating for the clauses. The trade group, which represents community pharmacy owners, said in a statement it is satisfied with the outcome, which resulted in a warning.

The CPSA is a standard form agreement between each DHB and community pharmacy for pharmaceutical services to the public.

In a statement today, the commission says two of the clauses in the 2012 agreement prevented pharmacies from waiving, or discounting, the $5 pharmaceutical co-payment paid by patients for dispensing prescriptions.

DHBs removed the clauses from the agreements at the beginning of 2013 after receiving notice of an investigation, commission chairman Mark Berry says in a statement.

“This meant that a warning letter was an appropriate response,” he says.

Removing the clauses benefit consumers because pharmacies are able to compete on prescription charges, he says.

“Once the no discounting clause was removed, two pharmacies in lower socio-economic areas in Christchurch and Auckland advertised discounting again and noticed an increase in the number of prescriptions being dispensed,” he says.

Government agencies must consider the effects on competition when entering into procurement contracts, Mr Berry says.

“Pharmacies and other health providers must also remember that they are in competition with each other despite the collegial nature of their professions,” he says.

Community pharmacy services are funded by the government using the CPSA as a standard form. The agreement is usually re-negotiated every three years.

The 2012 CPSA, which came into effect in July 2012, overhauls the way pharmacists are paid by DHBs and is being phased in over a two-year transition period.

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