Agency: New reform bill would impact drug availability outside major cities ({{contentCtrl.commentsTotal}})

Pharmacy.
Pharmacy. Source: Siim Lõvi/ERR

A legal analysis put together by the State Agency of Medicines finds that draft legislation to abolish Estonia's planned pharmacy reform would deepen unfair competition on the pharmacy market and impact availability of medicinal products as branch pharmacies are subject to limited requirements. For example, branch pharmacies are not obligated to prepare medicinal products on location.

The agency writes that the explanatory memorandum of the bill suggests the aim of the amendment is to alter the Medicinal Products Act in a way that would make it possible to move forward with the pharmacy reform by avoiding a situation where 64 percent of pharmacies would have to close shop that would result in problems with availability of pharmaceuticals and patients' lives put at risk. The amendment is also aimed at managing state and local government risks and reduced infringement of the rights of current pharmacy operators.

The memorandum's summary reveals that the bill is aimed at abolishing planned ownership restrictions as an ineffective method for ensuring quality of the pharmacy service and availability of medicinal products. The bill also includes changes that are not tied to pharmacy license ownership restrictions, such as reorganization of the system of branch pharmacies, reducing the number of mandatory pharmacy services and the relative importance of pharmacists.

The State Agency of Medicines finds that despite the bill's stated goal of allowing the reform to continue, it seeks to abolish requirements introduced to regulate pharmacy ownership relationships (effectively canceling the reform), expand pharmacy services through branch pharmacies that is set to create unfair competition all over Estonia, as well as remove the obligation of preparing medicinal products on location for most pharmacies in settlements with fewer than 20,000 residents (branch pharmacies) and have fewer qualified pharmacists working in pharmacies.

The agency finds that the planned changes are disproportionate to the aim of the bill in going far beyond it. The bill is found lacking in terms of describing the problem, its consideration for alternative solutions, effects analysis of proposed changes and future effects.

The medicines' agency finds that allowing pharmacy chains to operate branch pharmacies in cities with fewer than 20,000 residents would hurt availability of medicines as branches are subject to reduced requirements.

For example, branch pharmacies are not required to prepare medicinal products on location or have a trained pharmacist on staff, while their premises and opening hours are also subject to fewer restrictions. This means that owners would not be obligated to operate full pharmacies outside Tallinn, Tartu, Narva, Pärnu and Kohtla-Järve. The current requirement to ensure availability of pharmacy services for at least 40 hours a week in settlements with over 4,000 residents would also be removed, with the recent bill putting the limit at 20,000 residents that would only cover Estonia's five largest cities.

"The amendment is set to impact availability of pharmacy services. The explanatory memo is unclear on why its authors want to limit availability in most places in Estonia. Saving on labor costs cannot justify reducing the availability of pharmacy services," the agency finds. "We are dealing with a proposal that caters to chain pharmacies by reducing labor expenses, unfortunately, at the expense of the quality of the service."

The bill to amend the Medicinal Products Act includes no limit on branch pharmacies, meaning that any operator of at least one full pharmacy in any of the five largest cities can apply for a branch pharmacy license. The new law would also allow owners to turn their recent general pharmacies into branch pharmacies in smaller cities to take advantage of limited requirements immediately.

"The change is aimed at abolishing pharmacies' obligation to prepare medicinal products on location. Outside the said five cities, patients would no longer have access to drugs mixed at the pharmacy that would hurt general availability and lengthen delivery times. Often such medicines are needed urgently, by children for example," the medicines' agency writes.

Last year, pharmacies prepared around 100,000 packages of medicinal products themselves.

Proposed changes would allow current chains to aggressively expand in settlements with fewer than 20,000 residents that would in turn harm competition and oust general pharmacies, including those owned by pharmacists, the agency concludes.

"For example, when a chain pharmacy opens a branch pharmacy in a city with fewer than 20,000 residents that has a general pharmacy owned by a pharmacist, the latter will not be able to register as a branch pharmacy if the owner does not have a general pharmacy in one of the aforementioned five cities. This will create unfair competition on the pharmacy market," the analysis reads.

Getting rid of the vertical integration restriction included in the initial reform plan will allow wholesale license holders to maintain both wholesale and retail sales, continue affecting pharmacies' choices, keeping new wholesalers off the market, demand and introduce hidden conditions for license holders for marketing new drugs. In summary, the changes impact launch of new medicinal products and availability, as well as favorable price formation through competition," the State Agency of Medicines concludes.

The agency's general position is that current problems will not be addressed but will deepen instead. Its analysis finds that items in the bill on tying restrictions and obligations to the 20,000 residents' limit instead of the current limit of 4,000 people are unfounded.

"The explanatory memorandum fails to explain the necessity of planned changes and lacks analysis on why these changes are in order. Explanation is given only as concerns abolition of the ownership restrictions requirements," the agency finds. "Planned amendments will lead to a situation where the pharmacy service might remain widely available on the surface, while its quality will suffer. The amendments do not serve the interests of public health but are aimed at protecting the interests of current owners of pharmacies and further consolidating their market position."

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Editor: Marcus Turovski

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