A new report calls for government action against Pfizer Australia’s direct-to-pharmacy (DTP) distribution model, claiming that it poses a threat to Australians’ “timely and reliable access” to prescription medicines.
The main threat presented by company’s exclusive distribution model – Pfizer Direct, which the company launched in February – is the fact that it is not covered by the Community Service Obligation (CSO), says the report, from Deloitte Access Economics. The CSO requires distributors to provide all medicines supplied under the Pharmaceutical Benefits Scheme (PBS) at a specified service standard within 24 hours of request or below the approved price to pharmacy, to wherever the pharmacy might be located. But Pfizer’s DTP model means that the firm – the largest manufacturer of medicines on the PBS – is now operating outside the CSO, and this has serious implications for the entire medicines supply chain, says the report’s author, Professor Ian Harper.
Instead of the CSO, Pfizer Direct operates in accordance with confidential service standards agreed with the Pharmacy Guild of Australia (PGA). This agreement is separate and distinct from the CSO and, most notably, contains no commitment “to ensure that Pfizer-manufactured PBS medicines are supplied to all pharmacies within 24 hours of order, irrespective of location or relative cost of supply,” says Prof Harper.
According to the PGA, Pfizer Direct has “much higher” service standards than those required by the PBS, but the National Pharmaceutical Services Association (NPSA), which represents full-line pharmaceutical wholesalers and commissioned the Deloitte report, points out that by April, the PGA had received 1,500 complaints about the standards of Pfizer Direct’s services.
When the new business model launched, the company had pledged that “all pharmacies will get next-business-day delivery if orders are placed before the 1pm cut-off time, with the exception of 17 pharmacies classified as remote, where deliveries will take around two business days.”
However, many pharmacists have complained that they have had to wait much longer for their deliveries, says the NPSA and, because Pfizer is not bound by the CSO, they are no longer able to obtain the company’s products from other wholesalers.
In his report, Prof Harper also warns that a move by other major manufacturers to follow Pfizer into the DTP model would progressively erode the viability of the CSO, “leaving CSO wholesalers with a pool of low-volume, low-margin medicines that are uneconomic to supply.” If the four largest drugmakers decided to withdraw from the CSO, this would approximately halve the CSO distributors’ current profit pool, while the option of abandoning the CSO would also become increasingly attractive to traditional wholesalers as they seek to maintain viability, “further compromising patient access to the full range of PBS medicines,” he suggests.
Prof Harper calls on the government to take action to ensure that patients’ timely, affordable access to medicines is not jeopardised by moves to DTP, and he believers the best way to do this would be to mandate, as a condition of listing on the PBS, that manufacturers must make their products available to CSO distributors at the regulated ex-manufacturer price.
“This would allow manufacturers to establish their own supply chain arrangements to meet their commercial objectives without compromising the current arrangements for timely supply of medicines and redundancy in the supply chain,” he proposes.
However, Pfizer has rejected calls for legislation; a report in The Australian newspaper last week quoted the company as stating that it had filled more than 200,000 pharmacy orders for prescriptions since Pfizer Direct went live, and that more than 99.5% of these had been delivered “accurately and on time.”
