Drug price cut pressuring pharmacies

THE federal government has secured significant price cuts for two key cholesterol-lowering drugs on the Pharmaceutical Benefits Scheme, leading to warnings on wholesaler and pharmacy revenue.

The Department of Health and Ageing gained a 25 per cent price-cut from a generic supplier of atorvastatin, which was marketed as Lipitor and made by Pfizer. Similarly, the price of rosuvastatin, marketed by AstraZeneca as Crestor, is expected to fall by 21 per cent.

The reductions, to take effect in December, are expected to trim $200 million from the cost of the PBS, which was estimated by Credit Suisse to cost the government $8.5 billion in the 2012 financial year.

Complaints have also been raised that Australians pay more for generic drugs than people overseas, and that pharmacists had large margins on cholesterol drugs since Lipitor went off patent earlier this year.

Analysts are mixed on what the changes will mean for the listed pharmaceutical wholesalers, Sigma Pharmaceuticals and Australian Pharmaceutical Industries.

Credit Suisse told clients this week price cuts would not impact on Sigma and API's earnings. Deutsche Bank said while the effect on wholesalers would be modest, pressure on pharmacists would flow through to Sigma and API. UBS said as pharmacy profits came under pressure, distributors ''are finding it increasingly hard to pull back discounts to protect their own profitability''.

API chief executive Stephen Roche said API would ''need to be going back into the market at some point in time, reviewing either our discount opportunities [to pharmacists] or some other efficiencies''.

The pharmacy body, the Pharmacy Guild of Australia, said the price cuts to ''two of the most significant drugs on the PBS'' would pressure community pharmacies.

''Unanticipated price changes such as these are disruptive to the industry and jeopardise the viability and business planning of community pharmacies at a time when pharmacies along with all of the retail sector are facing difficult commercial conditions,'' it said.

Pfizer Australia declined to comment.

The story Drug price cut pressuring pharmacies first appeared on The Sydney Morning Herald.

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