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Sid Dajani, the RPS-elected representative on the Pharmaceutical Group of the European Union, suggests that a second wave of liberalisation may be about to hit pharmacy

Liberalisation is a dirty word in some countries, and especially in pharmacy where it can lead to confrontation and confusion. The Italian government recently proposed the removal of rules restricting ownership of pharmacies in Italy to pharmacists. The move came as a complete surprise – it had been expected that the government would abolish establishment rules and allow some prescription medicines to be sold in the mass market. Instead, it opted to allow chains in Italy.

Arguably, we are seeing a second wave of EU liberalisation in the pharmacy sector. The first wave, which started from the early 2000s up until the European Court judgment on ownership in 2009, saw various forms of regulation (including ownership rules, establishment rules, and OTC exclusivities) removed in more than 10 European countries.

The proposed Italian move follows the announcement that in Spain the competition authority is going to produce a report on the pharmacy sector. We already know that some elements in the Spanish government favour removal of ownership rules, and the tendency of all competition authorities to apply free market models in healthcare makes the outcome of the report rather predictable.

Estonia removed establishment restrictions at the beginning of the year, and the European Commission is pressurising Hungary to abandon rules on pharmacist control of pharmacies. However, in characteristic EU functionality, a draft report published in March 2014 puts competition in pharmacies in a very negative light!

This draft suggests that pharmacy liberalisation can lead to declines in quality, and that general sales of OTC medicines do not lead to significant price decreases. The report had been prepared by the expert panel appointed by the Commission to advise on investment in health. The panel includes Pedro Pita Barros, who recently addressed the PGEU Economics Working Group.

The report looks at a variety of issues relating to competition in the health sector, but in the section on pharmacies specifically points to a recent academic study suggesting that quality can suffer as a result of liberalisation. Another section suggests that the 2006 liberalisation of OTC sales in Portugal led to lower prices, but not ‘substantial’ decreases.

This therefore flies against the liberalisers, who argue that sometimes the greater scale of pharmacy chains is a source of economic efficiency. But achieving large chains in a country like Italy is not a short-term project. Establishment restrictions remain in place, and in any event the current pharmacy owners have the best locations. Building a large chain in Italy would require massive investment, in a country that is not noted for either its political stability, its use of traffic lights as perennial decorations or bright economic prospects!