The Tribune

• Sector told ‘in best interest’ to shut today

• Food retailers asked to join; but won’t yet

• Talks with Gov’t at ‘standstill’ over dispute

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was last night facing an open revolt after private pharmacies were urged to “temporarily” close today due to the failure to resolve the price control expansion dispute by the November 1 deadline.

Shantia McBride, the Bahamas Pharmaceutical Association’s (BPA) president, yesterday advised its members that the ongoing stand-off - combined with the Government’s continued failure to respond to their proposals - meant it was in “the best interest” of pharmacies to close their doors from today.

There was no indication how long “temporarily” means, although the Association’s letter hinted it could last longer than just one day if the pharmaceutical sector cannot reach a sustainable compromise with the Government. The move raises the prospect that Bahamians and residents will suffer significantly curtailed access to vital medicines for a day, and possibly longer, if the situation is not resolved.

Ms McBride, writing under the heading “temporary store closure”, promised to inform Bahamians of a reopening date for the Association’s members “as soon as possible”. She advised patients needing emergency care to use the public clinic pharmacies or Princess Margaret Hospital (PMH).

The letter, which was sent to Tribune Business last night by Association members, signalled that the action was sparked by the Government’s ongoing silence and failure to respond to the price control alternatives it had submitted. “The Association has complied with minister Michael Halkitis’ request to offer recommendations to achieve economic relief for the nation on October 21, 2022,” Ms McBride wrote.

“This document was sent as a response to a lack of consultation from the Government with the pharmacy industry on the Price Control Regulations Amendment 2022. Our document sent on October 27, 2022, has not received a response to its contents [and] nor has our request for further discussion been acknowledged.”

Ms McBride continued: “Therefore the Bahamas Pharmaceutical Association has made the decision to advise its membership that it is [in] their best interest for pharmacies within the Commonwealth of The Bahamas to close our doors temporarily, commencing November 1, 2022.

“We value your customers and will advise of a reopening date as soon as possible to provide your customers with the excellent service they deserve. We note the need to ensure patient care, and request that in case of an emergency patients contact their nearest public clinic or Princess Margaret Hospital. We hope that you unite with us in this movement and God Bless The Bahamas.”

The Davis administration was last night holding an emergency meeting to determine how it will respond to the Bahamas Pharmaceutical Association’s move as Tribune Business went to press. It is understood that both retail and wholesale pharmaceutical operators are “on board” with the industry’s strategy, and a group may be present at today’s full Cabinet meeting in a bid to speak with the Prime Minister.

The temporary closure move also highlights the depths of the industry’s frustration and anger towards the Government over its failure to consult before announcing the price control revisions and expansions, and the threat this is perceived to pose to livelihoods and businesses. 

This newspaper was also informed that the pharmacists had reached out to their food retail and wholesale counterparts to determine if that sector, also facing a major price control expansion, will join forces and follow suit in “temporarily” closing their operations with effect from today.

Tribune Business, though, understands that food retailers were advised not to follow the pharmacy industry’s lead and are unlikely to stay shut this morning. As this newspaper went to print, it was thought food stores will open as normal this morning with the sector adopting a ‘wait and see approach’ to determine how the Government will react to the non-implementation of its proposed price controls by today’s November 1 deadline.

Given the uncertainty as to whether the new price control mark-ups will be enforced, the pharmacies and their wholesale suppliers have taken the position that they cannot be fined for violations if they are closed. While food stores will likely open they, too, will not be implementing the expanded price control regime - and its 38 product categories - as proposed by the Government.

The food industry’s position is that, since negotiations and consultation with the Government are ongoing in good faith, the status quo regarding price controls should remain and there are to be no changes until both sides reach an agreement in both parties’ interests and that of the consumer amid the cost of living crisis. As a result, the sector believes the November 1 implementation and enforcement deadline set by the Government cannot be met or apply.

And, should price control inspectors this morning descend on food stores and dish out fines for infractions, Tribune Business was told that the industry may then follow the pharmacies and close its doors too. “There are contingency plans in place if they [Price Control] do that, and yes, it will ignite a firestorm because they will have no choice but to defend themselves because they are not changing the prices,” one source said, speaking on condition of anonymity.

“For the Government to come back out and say there was a deadline, here are your prices, let’s see what they do with that. They’re out of time. It’s now impossible for businesses to do that. These businesses close at 7pm, 8pm at night and they are opening again at 7am in the morning.”

Philip Beneby, president of the Retail Grocers Association (RGA), which represents 130 food stores throughout The Bahamas, yesterday told Tribune Business that talks with the Government are “at a standstill” while effectively confirming that his members will not implement the original price control proposal by today’s deadline as set last week by Michael Halkitis, minister of economic affairs.

Speaking before the Pharmaceutical Association made its move, Mr Beneby said: “We haven’t heard anything from them up to this point even though that was their promise to us. Once we had submitted our proposal, they promised they would get back to us. We have done that and, as far as we’re concerned, we’re still negotiating.

“When negotiations are going on in good faith, nothing changes. The status quo remains. Everything remains the same until negotiations are complete. Up to this point we haven’t heard anything. We are at a standstill and I can’t say anything more. We sat at the table, everybody said what they came to say, we looked each other in the eye and made an agreement that we would get back to them.

“The Association worked on its proposal, submitted it and it’s for them to let us know what they plan to do. But nobody is saying anything. We’ll have to wait until tomorrow [today] to see what they come up with.” The food and pharmaceutical industries are vehemently opposed to the Government’s proposed price control expansion, and revised mark-ups, because it will leave them selling a greater proportion of their inventory at a loss.

This, in turn, will make their ability to survive increasingly precarious without significantly adjusting their business operating models and slashing costs - the latter of which will likely result in staff terminations. As a result, the Bahamian private sector is adamant that the Government’s proposal will place companies, jobs and incomes in peril unless all parties can achieve an acceptable compromise for easing the cost of living crisis impacting Bahamian consumers.

Price controls have always been a controversial instrument among the private sector, especially those companies and businesses impacted by them. They were imposed by the Government decades ago to prevent what it viewed as an unscrupulous merchant class from exploiting lower income Bahamians by unreasonably hiking the price of food staples and other essential products, thus placing them out of reach while undermining living standards.

However, opponents argue they are an anachronism that have no place in a modern 21st century economy. The private sector views price controls as an inefficient, distortionary mechanism that creates more unintended consequences than the supposed problems they solve.

They can result in product shortages through retailers and wholesalers refusing to stock loss-making items, while these firms also have to increase prices and margins on non-price controlled items to compensate for selling these goods as effective “loss leaders”.

One pharmacy owner/operator, speaking on condition of anonymity, said of the sector’s planned “temporary closure”: “This is what the Government asked for and this is what they’ll get. No one is implementing the new price controls. The general consensus is there’ll be no changes in price until we have an opportunity to the Government a sensible proposal.

“The Association presented a letter saying what they proposed is not acceptable. There needs to be dialogue between the Pharmaceutical Association, the retailers and wholesalers to determine the situation and how we move forward. No one is making any changes at this point until we get dialogue and consultation.

“That’s the fundamental position we’ve taken. There’s always people who break, but hopefully we will all stand together. Everybody seems to be on the same page with what the plan is moving forwards. There’ll be no changes until we come u with a formula that actually works,” the source added.

“Businesses are the ones that pay the taxes, provide the jobs, pay the electricity bills and such like. Yet they are the ones that the Government is coming after and trying to penalise. There’s something wrong with that. It doesn’t seem to add up, that’s the general consensus for how business owners feel. We got people through COVID, didn’t lay-off and now you get slapped in the face.”

Branville McCartney, the former Democratic National Alliance (DNA) leader, whose family owns Wilmac’s Pharmacy, responded: “No. Period. It won’t happen” when asked if his business would implement the price control changes with effect from today. The company is likely to close along with many of its competitors, as Mr McCartney spoke to this newspaper before the Association’s closure move.

“I really would implore the Government to please look at the situation again, sit down with the retailers, sit down with the Pharmaceutical Association, and come up with a plan to the benefit of all,” Mr McCartney said. “It cannot work. It cannot work. This is why the Government ought to take advice and guidance from the businesses prior to making decisions that affect them.

“Many of these people in government have never owned a tuck shop. Their position in politics, that’s the highest they have ever been in life. You cannot expect them to be any type of expert in this particular field. Take advice, take advice. It’s unfortunate. These politicians get into politics, yet they come to believe they are the experts on everything when, in fact, they are not.”

Under the Government’s initial proposal, food wholesale margins, or mark-ups, are capped at 15 percent for all 38 product line items listed, while those for retailers are set at 25 percent across-the-board. Those goods impacted, some of which are already price controlled, are baby cereal, food and formula; broths, canned fish; condensed milk; powdered detergent; mustard; soap; soup; fresh milk; sugar; canned spaghetti; canned pigeon peas (cooked); peanut butter; ketchup; cream of wheat; oatmeal and corn flakes.

The remainder are macaroni and cheese mix; pampers; feminine napkins; eggs; bread; chicken; turkey; pork; sandwich meat; oranges; apples; bananas; limes; tomatoes; iceberg lettuce; broccoli; carrots; potatoes; yellow onions; and green bell peppers.

Price-controlled mark-ups range from 15 percent to 18 percent for pharmaceutical wholesalers. For retailers, the range is from 35 percent to 40 percent. The medicines covered include vaccines, anti-diabetic drugs, decongestants, laxatives, contraceptives, antacids, anti-hypertension medicines, cough preparations, cardiovascular agents and serums.