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The Top 5: APP Highlights

1. Kos and Guild Contemplate a Competitive Future

Rather than resting on the laurels of a ‘nearly completed’ fifth agreement, Kos and other Guild speakers painted a compelling picture of the challenges facing pharmacy and what should be its ‘roadmap’. While the need to move from a purely supply position to a service provider model was not new, the likely lack of increased program funding under the agreement provides urgency. The Government will be establishing a pot of money for which various health providers will compete to obtain funding. For example, the Guild could be competing with call centres for funding the provision of patient advice. It knows it will have to compete vigorously if it is to maintain its position and members’ income.

2. Medibank Adapts to a Changing Environment

Medibank’s CEO George Saviddes gave a compelling presentation on how Medibank is restructuring its operations to meet the challenges of an ageing population and the demand for more expensive health interventions. It is moving from being ‘just a health insurer’ to being a ‘health management company’ with a focus on ‘wellness’. In one year the number of staff with a background in health management has grown from 20 to 1,200. George spoke of Medibank trialling a Health Clinic in Brisbane, which could become a competitor with emergency departments and pharmacies.

3. John Montgomery’s Farewell

The industry’s worse kept secret was disclosed: John Montgomery will soon retire from Alpapharma. In addition to being the CEO of Alphapharm, John has for many years been the face of the generics industry in Australia. There are few in the industry as articulate and incisive as John and in his farewell fifteenth APP appearance he delivered a typically reasoned speech on price disclosure, highlighting the adverse financial implications for the pharmacy sector. His parting message was the need for pharmacists to drive substitution up from its current levels of 72 per cent to 90 per cent in order to compensate. John will be missed but may re-appear as a ‘consultant’.

4. Ian Harper From ACCESS Economics

In his second appearance, Ian again wowed the audience with his ‘Shakespearean’ presentation style and his articulate exposition of the implications of price disclosure on the wholesale industry and hence the pharmacist sector. He noted the inherent complexity of price disclosure had resulted in five recent reports with widely varying estimates of the five-year impact of disclosure. These variations arose from differing assumptions about the extent of discounting for a particular molecule as well as the market shares of innovators and generics. Ian said wholesalers’ remuneration was tied to wholesale prices, therefore reductions in these prices would lead to lower margins for the wholesale sector, already suffering from low margins. This in turn would mean ‘it won’t be business as usual’ for their customers. Lower prices flowing from further PBS reform would only exacerbate this pressure.

5. Economists Michael Pascoe and Terry McCrann

Michael Pascoe and Terry McCrann from News Ltd, two of Australia’s leading business economists, noted Australia’s strong performance during the global financial crisis. But they had different views on the reasons for this success and the degree of future risk for Australia. Michael said continuing Chinese growth and high levels of population growth in Australia would keep our economy strong. By contrast Terry was more bearish about China in the long term and Australia’s dependence on it as a source of demand. He also highlighted the growth in financing ‘second-hand houses’, the potential for a real estate bubble and how much the banking sector had invested in housing.

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