Australian Supermarket Offer Could Boost Drug Retail

Amid Australia's latest round of five-year price negotiations with the country's Pharmacy Guild, supermarket operator Woolworth's has promised to deliver savings of up to US$382mn per year in return for favourable market deregulation. A government decision to approve and expand the scheme could herald a significant expansion in drug retailing.

Australian prescription drug sales are highly regulated, with industry agreements guaranteeing that the Pharmaceutical Benefits Scheme (PBS) continues to offer the lowest consumer drug prices in the developed world. Woolworth's argues that deregulation has been successful in countries such as the UK, where powerful supermarket operators have reportedly delivered cost savings of up to 30% on some prescription drugs.

However, it remains to be seen how substantial any cost savings will be, as the PBS tightly controls prices of most prescription drugs. Nevertheless, the offer is likely to be tempting, given Australian health authorities' deserved reputation for cost consciousness.