Pharmacy closures loom as one in 10 outlets loses money – report

One in 10 pharmacies is now losing money, according to a report for the Irish Pharmacy Union (IPU), with rural community chemists more dramatically affected.

The report notes that, for the average pharmacy, 57 per cent of turnover comes from community drug scheme payments. For independent pharmacies, the percentage is even higher. However, core income from community drug schemes has fallen by 29 per cent over the past 15 years. Over the same period, the costs associated with dispensing medicines have jumped by 23 per cent.

Covid-19 vaccinations – which amounted to revenue of nearly €26 million for pharmacies last year – masked the impact of the underlying fall in sales during the pandemic, the industry says. However, there are now concerns that with demand for vaccinations falling away, pressure on pharmacists will become more critical.

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“These figures lay bare that closures of pharmacies, particularly in rural areas, is likely,” said IPU interim secretary general Derek Reilly. “We have been warning of this for several years and it is now an economic inevitability unless there is meaningful action from Government to support the sector.”

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The report, prepared by Fitzgerald Power, calls for an increase in the dispensing fee and steps to ease pressure on labour costs.

In 2009, pharmacists received a fee of €6 for every medicine they dispensed. During the financial crisis, this was cut to €4.58, and has been frozen at this level over the past 14 years. That figure now matches the labour cost of dispensing prescriptions before any other overheads are considered.

The freeze on dispensing fees was cited as the factor placing the biggest pressure on pharmacy businesses by almost a third of respondents to the Fitzgerald Power report. It was followed by labour shortages (28 per cent), wage inflation (18 per cent) and security of medicine supply (17 per cent).

Labour costs accounted for almost a quarter of store turnover at the end of last year, up from 14 per cent back in 2010, according to the report, which says pay rates for pharmacists and technicians have jumped by 20 per cent and 14 per cent respectively over the past five years as it has proved increasingly difficult to source staff.

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The report concludes that if personnel costs increase as expected in the coming years, “a large number of pharmacies would go out of business under the current fee structure”. It suggests the dispensing fee should now rise to €6.50 per item.

It estimates that this would cost the State €126 million annually, a figure it concedes is “not trivial, but also, relative to other costs in the health sector, not exorbitant”.

The IPU says such an increase would “safeguard the future viability of pharmacies”.

“It would allow pharmacy owners to continue to meet increasing wage demands while also investing in expanding services,” Mr Reilly said. “Failure to support the sector will have dire and potentially irreversible consequences.”

The report also calls for the provision of an additional 50 places for students in pharmacy courses in Ireland.