The Rent-Seeking Guild

The Rent-Seeking Guild

July 28, 2015

It is night, a fever takes hold and a mother starts to worry.  A bathroom cupboard is raided, but it is full of medicine past its use-by date.  A child is bundled into a car.  A waiting room is endured.  Then a GP provides a prescription.

With child in arms the mother returns to the car, then scratches her head.  Where is a chemist that would be open at this time of night?

The mother scrounges for her mobile phone, but it is out of charge.  Should she drive around in the hope of finding a chemist that’s open, or trek back home to look one up?

Driving past the lit-up supermarket, the mother wonders, “Why is it so hard to find a chemist?”

Meanwhile, the enthusiasm of a young pharmacist slowly seeps away.  She’s at home, twiddling on her iPhone, passing the time.  She had a short shift today.  They’re always short shifts.  She’s just a temp.

She used to dream of running her own pharmacy.  The dream took hold during her years of business and pharmacy studies.  It lingered on after graduation as she did stints — in pharmacies far and wide — working for the man.  But now the dream of working behind her own counter, building her own reputation, in her own neighbourhood and community, is gone.  It was a silly dream.

Over at the Pharmacy Guild headquarters on National Circuit in Canberra, David Quilty, the Guild’s Executive Director, reclines in his office chair.  His late night meeting with the Health Minister went well.  The Guild’s members — the owners of pharmacies across Australia — will be pleased.

All going to plan, the next Community Pharmacy Agreement — a five year deal between the Guild and the Government — will be much like the last one, and the one before that.  The deal should see pharmacy owners continue to enjoy regulations to protect them and subsidies to enrich them.

Mr Quilty recalls how he had to explain to the Health Minister his own regulations.  “They ban new pharmacies within ten kilometres of an existing pharmacy.  Of course, this exclusion zone is reduced to 1½ kilometres if the new pharmacy is to be near a GP or supermarket, 500 metres if the new pharmacy is to be in a large medical centre or small shopping centre, and 200 metres if the new pharmacy is to be near four GPs and a supermarket.  And two pharmacies are allowed in large shopping centres with more than 100 shops; three are allowed if there are more than 200 shops.  Naturally, pharmacies directly accessible from a supermarket are banned.  And the regulations require any new pharmacy to be approved by an authority that includes incumbent pharmacy owners nominated by the Guild.”

Mr Quilty chuckles as he recalls the Health Minister’s bemused look.

As the Commonwealth car drives off into the night, the Health Minister shakes his head in the backseat.  He ponders the numbers thrown around in the meeting just gone.  More than $15 billion from taxpayers to around 5,000 owners of pharmacies over five years.  He does the maths in his head – that’s around $600,000 per owner per year.  Nice work if you can get it.  And well above the tens of thousands of dollars that the Pharmacy Guild provides in political donations.

A wry smile passes his face as he heads back to the comfort of Parliament House, a place where deals usually involve the Government getting something in return for giving something away.

He’s philosophical.  No previous Health Minister has been able to cut the taxpayer funds flowing to pharmacy owners, or remove the anti-competitive regulations that grant them protection.  And perhaps no Health Minister ever will.

He resolves to get the deal done with the Guild – the most feared lobby group in Canberra — as soon as possible, before the Government-commissioned Review into Competition Policy reports.

As the Commonwealth car pulls up at Parliament House, an image pops into the Health Minister’s tired head.  A granny hobbles to the nearest chemist, then smiles at the owner in the white coat.  The owner smiles back, thinking of the margin provided by the taxpayer — up to $148 — for each prescription filled.  He asks the granny to sign a petition while she waits.  She scans the petition — something to do with keeping some regulations.   She signs her rickety signature as the man in the white coat passes over the medicine.

Such a nice man.