The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

PRIVATE pharmacies have “been doing good” and “progressing” since reaching their price control deal with the Government, the Bahamas Pharmaceutical Association’s (BPA) president said yesterday.

Shantia McBride told Tribune Business that most, “if not all”, pharmacies in the association were complying with the letter and spirit of the compromise agreement reached with the Davis administration. She added that members will be able to determine the impact on their revenues, cash flow and profits by the end of the next VAT filing period.

“We’ve been doing good. We’ve been progressing,” Ms McBride said, adding that the sector had implemented the agreed price and margin/mark-up changes. “Well, the only challenge, primarily, was our pharmacy systems, because the drug categories.... our pharmacy system doesn’t necessarily put our items in based on categories.

“So we had to create new mechanisms of putting it in. So we just sat down and decided among ourselves how to strategically input that information.” Aside from that, it is still “too early to tell” if the additional price control measures will affect pharmacy profits after the deal with the Government was struck two weeks ago.

“I think we’re just going into two weeks, so we haven’t fully dealt with that in terms of that data. So I’m assuming by the end of this first VAT period we would know but, based on our forecasts, we recognise profit won’t be the same but we would still be within margins of operating,” Ms McBride said.

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 has increased by ten medications.

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 will also simplify 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 agreed to expand the price-controlled medications by ten items to include cancer and kidney treatment drugs. The higher margins mean that pharmacies are no longer on the edge and in fear they may have to close their doors.

Ms McBride added: “The first document we actually saw had us at about 20 percent, and then the next day the signed documents said 35 percent and 40 percent. So we were lost as to what was transpiring behind closed doors, and remember, the price control list didn’t have items for pharmacy; it only had anti-diabetic, anti-cardiovascular categories only.

“So we were trying to understand: What did they mean? Were they referring to everything? Because that is like saying oil, without clarifying if they mean Wesson oil or Olive oil. We just didn’t know what they were talking about.”

The Association had warned the initial mark-ups were too low, and that many of the smaller pharmacies would be forced to shut down because they would be operating at a loss. This led to weeks of negotiations with the Government over a revised strategy to implement the expanded price control measures.