The Tribune

• But resolution still to be ‘finalised’

• Bran rejects PM’s savings point

• Davis: Tax cuts not passed on

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian pharmacies and the Government were last night said to have made progress in resolving their price control dispute as one operator rejected the Prime Minister’s assertion that savings are not being passed on to consumers.

Branville McCartney, the former Democratic National Alliance (DNA) leader, whose family owns Wilmac’s Pharmacy, told Tribune Business it was “not the case at all” that his business had failed to pass on import tariff cuts to clients via reduced prices.

He was responding after Philip Davis KC, speaking in the House of Assembly yesterday, hinted that the Government had opted for a major price control regime expansion - and a significant reduction in food and pharmaceutical industry mark-ups on key products - because the private sector could not be trusted to pass the impact of tax cuts on to the Bahamian people.

While providing no evidence to back up that suggestion, the Prime Minister almost seemed to pre-empt the outcome of his 4pm meeting with pharmaceutical retailers and wholesalers by asserting that he expected the industry to come into full compliance with the revised price control regime and reduced mark-ups.

But Tribune Business sources, speaking on condition of anonymity because they were not authorised to talk publicly, told this newspaper that the meeting “went well” and the makings of a possible compromise resolution had emerged.

“I just heard that the meeting went well and a compromise was reached. Exactly what that is I’m not sure at this point,” one pharmacist said, adding that while industry and government had “reached agreement it has to be finalised in further negotiations”.

Both sides were tight-lipped last night on what was discussed at the meeting and its outcome. Shantia McBride, the Bahamas Pharmaceutical Association’s (BPA) president, did not return this newspaper’s messages seeking comment. Michael Halkitis, minister of economic affairs, who was at the meeting, also did not respond before press time although it seems like further negotiations and talks are required.

Tribune Business understands that both sides verbally agreed to keep their discussions confidential. Sources suggested negotiations over the price controlled mark-ups for wholesale and retail operators were especially tough, but that they had come out at “the higher end of the margins”.

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 Government’s 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.

Had the initial proposal been eliminated it would, in percentage terms, have cut retail pharmacy margins by between 20-30 percent, while those for wholesalers would have dropped by between 28 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.

The Prime Minister’s morning comments in the House of Assembly indicated that the Government was not minded to shift its stance, and that it expected all retail pharmacies and their wholesale suppliers to implement the new regime or be subjected to enforcement measures or fines.

“We are very mindful of pressures facing Bahamian businesses,” Mr Davis said as he led debate on a resolution to increase the private sector minimum wage to $260 per week. “Similarly, when we added diapers and more food items to our price control list, we are signalling to businesses that we expect the savings from reduced Customs duties to be passed on to Bahamians. Business owners will still make a profit, just a little less than they would otherwise.

“We have listened to their concerns, and we have been flexible about some of the details. We will continue to review the impact of price controls on both consumers and businesses. But the bottom line is the costs of this global inflation crisis must be a shared burden, not one that falls primarily on Bahamian families that are working to get by.

“It’s a shared burden. That’s my cry to all. So that’s all I’m asking. Let’s share this burden. The new price controls on medications are in effect. Pharmacies will remain open, and we expect pharmacies to come into full compliance in the coming days. In raising the minimum wage and expanding price controls, my government is holding firm in protecting the interests of the Bahamian people.”

Mr McCartney, though, rejected the notion that his family’s Wilmac Pharmacy had withheld import tariff cuts from consumers and failed to pass them on. “That’s not the case,” he told Tribune Business. “I don’t know about other pharmacies and food stores, but that’s certainly not the case for me personally. That’s not the case at all. Not for my business. That’s not true. No, no, no.

“I don’t see that happening. Certainly if that’s the case you wouldn’t see the pharmacies and grocers in such an uproar. Just speaking to some of the other pharmacies, that’s not the case at all. Jesus, pharmacies have been barely making it in this country at all, especially since the National Prescription Drug Plan came into play. That took up a lot of our business. We’re doing that for the Government; we’re their agents, more or less.”

Mr McCartney reiterated that the Government has provided retail pharmacies with too little time to transition to a new price control regime, and that they will be forced to sell much of their existing medicine industries - bought at a higher price prior to the change - at a significant loss.

“Look at the stocks we have in place already,” he said. “Let’s just say new price controls come in and everybody complies. New stocks are fine to put those on right away, but when you have existing stocks in your pharmacy, to put that type of cost on it you’ll lose tremendously on those types of products.

“We’re just barely getting by. Something is going to have to give if this goes through. It goes against what the Government is trying to do. I understand what the Government is trying to achieve; I’m a consumer. I go to the food stores. I’m feeling the pinch personally. But if consumers lose their jobs as well, what does that do? The Government cannot get involved in private business. That’s a recipe for disaster.”

The Association, in statement released on Tuesday 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”.

It added: “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.”