Huko Aaspõllu: Pharmacy reform has failed

Huko Aaspõllu
Huko Aaspõllu Source: Siim Lõvi/ERR

Everyone understands that a reform that would only allow dispensing pharmacists with higher education to own pharmacies, set to enter into force from April of next year, will not take effect in time. Instead of playing for time or introducing cosmetic changes to the reform plan, the pharmacy market should be liberalized to a substantial degree, ERR journalist Huko Aaspõllu says in Vikerraadio's daily comment.

The coalition working group tasked with deciding what to do with pharmacies met again last week. We're talking about a bill passed in 2014 that provides that drugstores can only be owned by dispensing pharmacists from April of 2020. A lot of pharmacies, over 300, still do not meet the requirements. And we have no reason to believe they will by April next year.

Big business

Pharmacies have put up calendars counting down the days until the reform deadline and their subsequent closing. Politicians are clearly worried as a large part of pharmacies being forced to close their doors is hardly an attractive prospect.

The Ministry of Social Affairs does not deem it necessary to amend the law in key areas – perhaps to give pharmacies more time and only require pharmacist owners in certain regions. To avoid drowning different state agencies in paperwork.

Major owners of pharmacies have voiced so-called compromise proposals that would allow them to keep their current pharmacies, while only allowing pharmacists to open new ones. The proposal would effectively lock down the Estonian pharmacy market for its two major owners and prevent a third from entering.

Pharmacies are big business. Estonia's general and hospital pharmacies had a total turnover of €500 million last year. Half a billion! This means that the two major owners of pharmacies have a keen interest in influencing legislation that concerns their business. At the same time, all of it might not be in society's best interest.

Perpetuating the current situation where two major players have all but divided up the market between them might mean less than stellar competition. This would result in lower efficiency and higher prices, which is what tends to happen to semi-monopolized markets. The two major owners are not interested in seeing new players enter play and bite into their market share.

Every reform idea should be able to answer the question of problems it is meant to solve. When it comes to the pharmacy reform, it could be either better availability of medicines or cutting costs. The current reform has achieved neither goal. Nor does it look like it might in the future. Rather, potential effects are the opposite.

In truth, we need to deregulate the pharmacy market that automatically boosts efficiency and open the sector to potential competition that also works to promote more effective operation. There is no reason why Estonia should only have two major pharmacy chains just because they're already here.

There is also no reason why a business, which is what a pharmacy is, has to be owned by a dispensing pharmacist. It can, but why should it be a rule?

There are a number of rules in place for opening new pharmacies, while people must be served by dispensing pharmacists. Why do we need the latter to also own pharmacies? No one has managed to provide an exhaustive answer to the question. Will we only allow captains to own shipping companies, pilots to own airlines or bus drivers to own coach operators next? It is hardly convincing. The pharmacies' ownership restriction is not justified.

Over-the-counter drugs and food supplements

Another question is why we do not allow the sale of over-the-counter (OTC) drugs outside pharmacies. What purpose does that serve?

First of all, selling OTC drugs supports existing pharmacies' turnover and makes them more profitable. The former being available at gas stations and grocery stores would take away a part of pharmacies' €60 million OTC turnover.

However, that is not the only aspect involved. In addition to direct turnover from sale of OTC medicines the markup of which is quite modest, pharmacies can also sell other goods to people who come in to buy over the counter. Things like food supplements or natural products. These goods are far more profitable. So, it is quite safe to say pharmacies would not like the idea.

That said, from the point of view of availability of over-the-counter medicines, it would be better for people to be able to buy painkillers 24 hours a day – also in rural areas. Or paracetamol. Or any OTC drug for that matter. From gas stations, for example, that are open 24/7 anyway, without anyone having to pay them extra. It would clearly contribute to social well-being.

Yes, Tallinn has 24-hour pharmacies that operate based on local government subsidies. But why couldn't a person who lives in Võru be able to buy ibuprofen at 10 p.m. if they suddenly feel pain? While OTC drugs moving into supermarkets could cause a few pharmacies to close doors, the availability of prescription drugs could be ensured by the local government. The result of this would be that general availability of medicines would grow.

The Ministry of Social Affairs and agencies in its administrative area say that people will put their health at risk if shops sell ibuprofen instead of pharmacists – by overusing the drug. And yet, every gas station already sells much more dangerous commodities than OTC medicines, like motor fuel, alcohol and lighter fluid.

People cannot be protected from themselves forever. A person can buy enough OTC drugs to seriously damage their health at any pharmacy today. The argument that this is why better availability is dangerous rings hollow.

Luckily, coalition partners' deliberations came to include the option of liberalizing the pharmacy market using the reform. Cautiously at first. Hopefully, that is where we are headed and there will be more support for the proposal when the working group meets again next week. A pharmacy reform having fewer restrictions would benefit everyone.

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Editor: Marcus Turovski

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