The Tribune

• Bran ‘hopes and prays’ for good outcome

• Says price control plan ‘recipe for disaster’

• Industry warns 60-70% of revenue to be hit

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Private pharmacies will reopen this morning after the Government relented and agreed to a meeting between the Prime Minister and industry representatives today to address the price control dispute.

Branville McCartney, the former Democratic National Alliance (DNA) leader, whose family owns Wilmac's Pharmacy, confirmed to Tribune Business that himself and other retailers will open "in good faith" - but not with the Government's expanded price control regime and reduced mark-ups - following yesterday's closure after the Davis administration agreed to return "to the bargaining table".

"They got a note about an hour ago indicating a meeting will be held tomorrow with the Government, and the group is deciding to open," he said of the Bahamas Pharmaceutical Association (BPA) and its members. "Negotiations are in play. Part of that will be for us to open, and the other part of that is to get the Government to the bargaining table and have a discussion.

"The pharmacies will open tomorrow [today] but at the regular prices because we are still in negotiations with the Government. That's what we wanted; to get the Government to the table so we could discuss the situation. Hopefully this results in something positive to the benefit of all with the outcome of that meeting. I hope and pray something positive comes out of that which will be for the benefit of all.

Shantia McBride, the Bahamas Pharmaceutical Association's (BPA) president, did not respond to Tribune Business calls and messages seeking confirmation and further comment. However, other pharmacy sources, speaking on condition of anonymity, affirmed that the meeting with Philip Davis KC will take place at 4 pm today and also feature Michael Halkitis, minister of economic affairs, who has ministerial responsibility for consumer protection and price controls.

"Hopefully that will be the turning point in the conversation," one source said of today's encounter with pharmacy retailers and wholesalers. "The industry representatives went down to the Prime Minister's Office, and didn't get any sort of response. We then, through the back door, got in touch with people we knew in government and said: 'Look, here's what we're asking for'.

"'We're willing to open our doors but want the Government to sit down with us and have a sensible and rationale conversation on a strategy for the way forward as it relates to price controls'. If they agreed to meet with us, we'd open the pharmacies tomorrow [today]. We will now move forward in good faith. That's what we've been asking for all along; to sit down in good faith and have a conversation that is fruitful and leads to the way forward as it relates to price controls."

Private pharmacies closed yesterday over fears that they would suffer fines and penalties for not implementing the new price control mark-ups and margins, as detailed in the Government's original proposal, by the November 1 deadline. Uncertainty over whether sanctions would be imposed stemmed from the Government's failure to respond to the industry's alternative solutions, and its announced determination to press ahead with enforcement come yesterday.

The Bahamas Pharmaceutical Association, in its October 27 letter to the Government, urged that it retain the 25 percent and 50 percent price control margins for wholesalers and retailers, respectively, which have been in place for 40 years on prescription drugs. The revised mark-ups, unveiled in mid-October, 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. "There'll be no change in price but we'll be open to serve the public," the pharmacy source said of the industry's position today.

They added that the proposed price control expansion, and margin reductions, are "the beginning of the fight with the Government at many levels; I don't think it's the end. Over the coming weeks and months we'll find ourselves in places of resistance to the Government, and we're going to have to stand our ground so we have a voice at the table. We are stakeholders. We must be heard, sit at the table and come to some sensible agreement on the way forward".

The Association, in statement released earlier yesterday calling for a meeting with the Prime Minister, said the price control reforms unveiled by the Government would impact "some 60-70 percent" of retail pharmacy and wholesale revenues and "threaten their ability to survive in an already-challenging business environment".

Referring to Mr Davis' national address in mid-October, in which he promised a major price control expansion covering food and medicines to help ease the cost of living crisis for middle and low income Bahamians hit by soaring inflation, the Association replied: "Sounds great, doesn’t it? But not so fast. What if the reduction in mark-ups were so low that store owners are unable to pay their staff or their other bills.

"After all, in that same national address, the Prime Minister announced that there would be an increase in minimum wage and, just one week prior, on October 4, the Government announced that there would be an increase in electricity bills. In addition to that, many properties were reassessed earlier this year, which resulted in a significant increase in real property tax for many businesses.

"Shipping costs have also gone up since the onset of the COVID-19 pandemic, and the cost of doing business is significantly more now than it has ever been. On October 12, without any consultation with grocers, pharmacists or wholesalers, the Government issued a price control amendment with mark-ups so low that they were indeed below the operating cost of these businesses," the Association's statement continued.

"With the list of products affected by the Government’s price control amendment representing some 60-70 percent of the revenue generated by local pharmacies and pharmaceutical wholesalers, it would be hard to make up that revenue on anything else. Current mark-ups have been in place for more than 40 years and, in spite of the increase in overhead, there has been no increase in mark-ups since that time."

The Association said its members have frequently partnered with the Government, including over the National Prescription Drug Plan, where they "took a significant reduction in mark-ups" and also the wholesale sector's provision of medicines to the public sector clinics "at very low prices".

Mr McCartney, meanwhile, told Tribune Business that the Government's original price control proposal was "a recipe for disaster" given that the mark-up cuts would result in pharmacies selling too great a portion of their inventory at a loss. This, he added, could force smaller pharmacies to close and others to cut staffing levels as they were forced to realign costs to cope with reduced revenues.

"It's not sustainable to put this thing in play," the former DNA leader said. "We're going to lose big time." He agreed that the proposed price control expansion was tantamount to government overreach, and unwarranted intrusion and interference in the private sector's affairs, saying: "There's no doubt about that.

"The Government is almost trying to control private business, and that's a recipe for disaster. I've always maintained that I understand what the Government is trying to do, but consultation is something that should have been done with all stakeholders. The Government made a decision without consulting that could potentially close these businesses if implemented or cause the loss of jobs, and they seem so hard-headed.

"They met after the fact with the Association, asked the Association to provide some suggestions. The Association provided some suggestions but they still issued, without any discussion, this suggestion that price controls would be implemented or enforced from November 1. It makes you wonder whether or not the meetings you have with the Government are in good faith on its part," Mr McCartney continued.

"You sit down with them and listen and, notwithstanding that, they are still hell bent on putting price controls into effect on that same date. It's a bit disheartening, a bit disheartening." Public opinion was divided on the pharmacy closures, with some supporting the move by saying the sector's "backs are up against the wall" with the price control mark-up cuts placing some businesses in a "life or death" situation.

Others, though, described the closures as "premature" and a move that could alienate many Bahamians - especially those in need of critical medicines, who had to endure frustration and inconvenience yesterday in seeking them from public clinics where queues were longer and inventory shortages more likely.

One well-placed source described it as a public relations 'own goal' that could let the Government off the hook, and enable it to play the 'us against them' tactic by stoking public sentiment against so-called "greedy" merchants. "I think it was foolhardy. The pharmacies did not endear themselves to the public through their actions in any way, shape or form. It's an essential service and a very sick population, where a lot of people are dependent on prescription drugs," they said.

"Things are hard for people. So hard, in fact, that people are unable to afford their full prescription and are getting two to three pills at a time - they can't get a week's dose - and are literally living day to day. It's like the person pulling up to the gas station and putting $2 in their tank. It's going to play into the Government's hands by allowing it to portray them as greedy."

Rev C B Moss, the well-known community activist, yesterday blasted the Pharmacy Association and its members over the closure. "This decision is appalling beyond words as these seemingly heartless people are prepared to use the public as pawns and place their health, as well as their lives, on the altar of economic expediency. They should have remained open until an agreement was reached, or the Government took action against them," he argued.

"We are hereby demanding that this ill-advised decision be rescinded immediately. If it is allowed to stand then we advise the public to identify stores that remained open and patronise them;,never again going near those who chose a few dollars over our lives."