FIP 2009: Large chains will not give up pharmacy pot of gold

by Lin-Nam Wang and Pamela Mason

Although the recent European Court of Justice (ECJ) judgment on pharmacy ownership (PJ, 23 May 2009, p604) was a momentous one in favour of pharmacy, European pharmacists must not let it be an excuse for stagnation. This was the message from John Chave, secretary general of the Pharmaceutical Group of the European Union (PGEU), during the 69th World Congress of Pharmacy and Pharmaceutical Sciences.

“We need to look at ways in which we can evolve practice within regulated structures and not just sit back simply because we know we are protected to a degree from normal market competitive forces,” he said.

The ECJ decided that laws that stop non- pharmacists from owning and operating pharmacies can remain in force. There is no right to appeal and several related cases (eg, involving France, Spain and Austria) will be scrapped, Mr Chave explained.

He expects that, if the logic of the judgment is followed, cases relating to “horizontal integration” will also be stopped.

(For example, Portuguese law says that anyone can own a pharmacy but they cannot own more than four, meaning that the big international European chains are excluded from the market because they have no interest in only opening four pharmacies)

However, he said that such cases make it clear that part of the European Commission (EC) wants complete, open vertical and horizontal integration. “[It wants] the big European international chains to take over and move into the European market. … Liberalisation does not stop here,” he warned.

According to Mr Chave, the pro-liberalisation part of the commission has two strategies: to take legal action and to advocate. For example, EC officials had been to Hungary and Bulgaria and put pressure on the governments, under the threat of future legal action, he said.

And it will continue with its advocacy strategy in autumn (2009), when there will be a workshop of national governments to look at pharmacy establishment groups. Moreover, the PGEU has learnt that the commission will also produce a communication on over-the-counter monopolies.

“[The EC] wants to see the three main pillars of pharmacy regulation — OTC rules, ownership rules and establishment rules — absolutely removed,” he said.

Other advocacy techniques used by the EC include the commissioning of studies that strongly support the economic benefits of liberalising pharmacies: “[The Ecory’s study] said, at one point, for example, that you could increase the productivity of pharmacies by having fewer pharmacists dispensing more medicines. Of course, there is no public health dimension to that statement at all. So the battle goes on.”

The next hurdle is the establishment rules. Over half the member states have rules limiting the opening of pharmacies, usually by demographic or distance criteria and there are currently cases before the ECJ for which a decision is expected later this year or early in 2010.

As with the ownership cases, defenders of establishment rules have to show that they are in the interests of public health, Mr Chave said. If the court follows the logic of its ownership decision — if it says that member states have a wide discretion to decide how their health systems are organised and that medicines require special consideration — he is optimistic that the court will find in pharmacists’ favour. “But we can never be 100 per cent sure,” he added.

Moreover, the large chains — Alliance Boots, Celesio, Phoenix and so on — are not going to give up, he warned: “The pharmacy market in Europe is a pot of gold and the rewards of liberalisation too great to stop now. So they’ll continue to lobby at national level — not at European level because the doors are closed — to promote more liberalisation.”

He said the EC will persist with its advocacy campaign and suggested that a domino effect could occur. “Already we see the eastern European countries liberalising their systems and, very significantly, the Swedish government liberalising its system,” he said. Other countries will look at those systems and changes to see what the effects are.

But perhaps the big challenge now is pharmaceutical budgets, Mr Chave said: “We’re simply spending too much on medicines.” He added that a lot of cost is in the distribution chain, which is leading to high prices because it does not operate in accordance with normal market principles.

So, rather than from a legal perspective the future debate is going to be more around the economics of the distribution chain in Europe, he warned.

Citation: The Salvadore URI: 10980662

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