The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Democratic National Alliance (DNA) leader yesterday said coping with the pharmaceutical industry’s new price control regime was “certainly a stretch” as it had left his family’s business operating at a loss.

Branville McCartney, whose family own Wilmac’s Pharmacy opposite the University of The Bahamas (UoB) on Poinciana Drive, told Tribune Business the company was “trying to hold out” given the Government’s pledge that the newly-agreed margins will only be a temporary measure to ease the cost of living crisis for middle and low income Bahamians.

Asserting that “we’ll cross that bridge when we get there” when asked what would happen if the Government does not revert to the previous price control structure when the new regime expires after three months, he added that Wilmac’s Pharmacy had elected not to increase prices on other pharmaceutical drugs to compensate for the lower margins.

Mr McCartney also reiterated to this newspaper his belief that the expanded price control regime was a “back door” admission by the Government that the reimposition of VAT on breadbasket food and medicines, and the elimination of their ‘zero rated’ status on New Year’s Day 2022, had been a mistake in the face of the subsequent inflation crisis. But they had adopted for price controls rather than reversing VAT to avoid conceding this publicly.

Speaking to the impact of the pharmaceutical industry’s November 3 deal with the Government, the ex-DNA chief said: “We’re trying to adjust. As a result we are seeing a bit of a loss. We haven’t, in our pharmacy, gone up on any other non-controlled prices. We’re hoping it will only last for a certain period of time.

“We’ve agreed to adjust the prices based on the meeting the Bahamas Pharmaceutical Association (BPA) had, and hopefully we can get back to some sort of normalcy in that regard. It’s a stretch. It’s certainly a stretch. We’re trying to hold out in anticipation that in a couple of months we can go back to normal. It just adds a bit more strain to accommodate price control.”

The Bahamas Pharmaceutical Association (BPA) and the Davis administration traded-off higher mark-ups for the industry with an expanded list of price controlled items that increased by ten medications when they struck their November 3 deal.

Pharmaceutical wholesalers and retailers now have one set mark-up across the board, at 20 percent and 40 percent respectively, for all price-controlled items in a move that also simplifies the structure. This places the price control mark-ups for wholesalers at a slightly higher level than the Government was initially proposing, between 15-18 percent, but some five percentage points less than the 25 percent they have enjoyed for the past 40 years.

As for retail pharmacies, the agreed 40 percent is at the top end of the range initially proposed by the Government. The Davis administration had sought a cut to between 35 percent to 40 percent, but the new mark-up is some ten percentage points less (a 20 percent reduction in percentage terms) than the 50 percent that pharmacies have enjoyed for the past decade.

In return for the Government keeping the margins at the upper end of its target range, the pharmacy industry has agreed to expand the price-controlled medications by ten items to include cancer and kidney treatment drugs. Mr McCartney, though, reiterated that the pharmacy business was “tough” even prior to the introduction of the new price control margins.

He added that retailers took “a huge beating” when the National Prescription Drug Plan was introduced by the last Ingraham administration. “That cut the pharmacy business tremendously,” Mr McCartney explained. “We just honestly break even on that, where we have to purchase the drugs and they are retailed at a certain cost.

“That has very, very slim profit margins and then you have to wait for the Government to reimburse you. That’s around 35-40 percent of our business, and that really hit us. That in itself had caused a strain, and then of course we had COVID. People may have thought pharmacies were making money, but that was certainly not the case I can tell you. That really put a dent in the business sector, the pharmacies, and then price control came. That’s further detrimental to the business.”

The expanded pharmaceutical price control regime, when initially unveiled in October, was to last for only three months until January 2023. Given the delayed implementation to November, it is unclear whether the expiry will be extended to February or if the Government will continue it beyond that to the continued pain of pharmacies such as Mr McCartney’s.

“That’s what we’re hoping for. That was the deal,” he added of the three-month term. “If they go against what was agreed, we’ll certainly cross that bridge when we get there. I certainly hope that is not the case, and that the Government will live up to what was agreed on both sides in good faith.”

Another pharmacist, speaking on condition of anonymity, said several operators had increased the cost of non-price controlled drugs and raised dispensary fees to offset the reduced margins. “What the companies are doing is putting higher mark-ups on the non-price controlled products, and some people have gone up on their dispensary fees,” they explained.

“Those used to historically be $2.50 to $3 for dispensary fees, just to dispense the drugs, but some pharmacies are up to $10 per item. Because the margins have been cut so slim, the small and medium-sized pharmacies have to make it up in some way do they’ve increased the dispensary fee per item and increased the price of other drugs.” 

Shantia McBride, the Bahamas Pharmaceutical Association’s (BPA) president, told Tribune Business that price control inspectors visited about one-quarter of her members last week but found no issues with compliance with the new regime.

“We had a few pharmacists that were inspected and, based on inspections, we haven’t had any issues and we’ve been seen to be compliant with the amendment. Everyone who is affected, you know, they dealt with the agents and they consulted one another and, at the end of each process, they left without any issues or any warrants or anything, so we were seen to be compliant,” she added.

 “They normally only come with three people, maximum, but this time was a little different.” Ms McBride said the inspections also had the appearance of training exercises, given that there were around six persons per team.