Agency: Pharmacy chains' proposals would further benefit wholesalers

The State Agency of Medicines doesn't support the EAÜ's proposals.
The State Agency of Medicines doesn't support the EAÜ's proposals. Source: Merilin Pärli/ERR

The State Agency of Medicines finds that the compromises proposed by the Estonian Pharmacies Association (EAÜ) for changes to the pharmacy reform are not in patients' interests and would instead serve to further improve the position of drug wholesalers and current pharmacy chains.

Two weeks ago, the EAÜ submitted four proposals for changes to the pharmacy reform to enter into effect next spring. The State Agency of Medicines, however, finds that the implementation of these so-called compromise proposals would further significantly strengthen the position of wholesalers and pharmacy chains.

The EAÜ's proposal involved closing the market in such a way that currently existing pharmacy chains could remain in the hands of wholesalers, but going forward, only pharmacists could open new pharmacies.

"This would essentially mean the preservation of the status quo, and the systematization of ownership by means of reducing the influence of wholesalers on pharmacies and the transition to pharmacist ownership would remain unattainable," said Director General of the State Agency of Medicines Kristin Raudsepp.

"In addition to preserving its current market situation, the proposal would also grant pharmacies that don't meet ownership requirements further rights to open branch pharmacies," she continued. "According to a decision of the Supreme Court of Estonia, however, such activity would harm the livelihoods of pharmacist-owned pharmacies."

The EAÜ also proposed that drug wholesalers be allowed to remain minority owners of new pharmacist-owned pharmacies, and that in larger areas, such companies could be allowed to open more than the four pharmacies as currently allowed by the new law.

According to Raudsepp, with this proposal, wholesalers are essentially seeking the right to buy more non-compliant pharmacies, which would serve to further strengthen drug businesspeople's market share.

"As many pharmacist-owned pharmacies — 59 franchise pharmacies since 2015 — are connected to wholesalers via franchise agreements, this proposal would essentially allow for the further increased influence of wholesalers," she explained. "While a wholesaler can currently only form a retail chain via franchise agreements and agreements for the use of trademarks without maintaining a dominant influence over the pharmacy itself, according to the proposal, [the wholesaler] could do so via ownership as well, i.e. a wholesaler could be a minority owner of a pharmacist-owned company."

As a result, wholesalers would profit not just off of drug wholesale activity, but also the retail sale of drugs, further increasing its market share and granting greater control over a pharmacist-owned pharmacy.

Pharmacy chains also proposed providing the owners of branch pharmacies in towns the opportunity to re-register as general pharmacies, but the agency is against this as well.

"According to the proposal, the wish is to preserve branch pharmacies, which are subject to fewer requirements, in towns, where the number and concentration of pharmacies is greater than it needs to be," Raudsepp explained. "Thus far, only pharmacist owners have been able to restructure branch pharmacies into primary pharmacies. Despite the fact that this proposal would allow the restructuring of a branch pharmacy into a general pharmacy at the same location, if you consider the proposals as a whole, they allow for pharmacies that don't comply with pharmacist ownership requirements and are restructured into general pharmacies the opportunity to relocate without any restrictions later."

Finally, the EAÜ has proposed preserving local governments' opportunity to open pharmacies in areas where pharmacy services are not accessible.

According to the agency, however, this has not played out in practice.

"Local governments have had the opportunity to apply for the opening of a pharmacy since March 20, 2015; to date, it has yet to be used," Raudsepp observed. "There are practically no places in Estonia where the requirement to render pharmacy services would be justified. Thus, the measure provided has not fulfilled its goal, and its use in the future is doubtful as well."

The government coalition is to discuss the EAÜ's proposals on Wednesday.


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Editor: Aili Vahtla

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