The $3 Shop

By Jim McVeagh 16/07/2010


The MacDoctor often refers to the pharmacy as the $3 shop (All funded script items cost $3.00). And, yes, patients often stare at him blankly, but one has to get one’s fun from somewhere. A recent Herald article claims that this fee is sometimes too much for low-income people causing them not to pick up their prescription. Actually, the research was done in 2004 when the script fee was $15.00 per item and was instrumental in the fee being dropped to $3.00 per item across the board, rather than for community service card (CSC) holders. Note that this was partly because a significant number of low-income people did not apply for the CSC; usually out of pride, sometimes out of ignorance.

Applying that research to today is therefore extremely dubious.

The script fee is essentially the pharmacist’s profit for dispensing funded medicines on behalf of the government. Most of it is now paid for directly by the taxpayer. There is no particularly good economic reason for retaining the $3.00 surcharge. The amount generated is relatively trivial and mostly swallowed by increased processing costs. In addition, it does not prevent overuse of medicines as a true part-charge may. All funded items must be prescribed by a doctor. I can tell you for certain that no doctor considers the script charge when prescribing drugs. The primary reasons why you would want to keep the number of script items down is that:

  1. People are less likely to take their medicine if there are a large number of items (two or three seems about the limit).
  2. The chances of an unexpected interaction between medicines increases rapidly with each additional script item.

A $3.00 script fee is not even a distant third.

This means that the script fee could be easily removed with no sudden blow-out of Pharmac’s precious budget. Unfortunately, this will almost certainly make only a small difference in the number of scripts that are not collected. Almost every large town and city has pharmacies that waive the $3.00 script fee. Whatever the percentage of patients in 2010 who claim that they can’t afford the script charge, that percentage is largely a proxy for lack of transport (if they had access to transport, they could get their scripts for free). While there are many reasons why people do not collect their medication, the predominant one has always been lack of transport. The other major reason is pride. WINZ is more than happy to provide temporary funds for medication. People simply do not want to ask.

A small percentage of people may not fill their script because they feel the doctor has not explained what their medicines are for. MacDoctor’s advice for these people is: find another doctor.

Occasionally, certain people are interested only in the sick note provided – never wanting treatment for their cold/flu/back pain/nausea etc.

Removing the script fee may assist some people whose GPs are within walking distance of a pharmacy that currently does not waive fees. These numbers are not large but, as the cost of removing this fee is likely to be marginal (when processing costs are taken into count), it is probably a worthwhile thing to do.

Extra bonus point for Mr. Ryall. Labour would hate it.

Additional:

I see David Farrar has also blogged on this.

So 94% do manage to pay the $3 charge. To me that suggests that rather than scrap the fee for everyone, you look at targeting assistance to those on the lowest incomes or greatest health needs.

Been there, done that. Some will still slip through the cracks, just as they do for the CSC. The fee is already pretty much worthless. May as well scrap it entirely.

And, as usual, DPF’s comment trolls suggest that, if people can afford smokes and alcohol, they can afford a script fee. May I remind them that the vast majority of medical transactions are unplanned. People spend their money on smokes THEN get sick and need medication. And planning ahead is what these people do worst – that is usually why they are poor…

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