Pharmacy magnate urges Riigikogu to stand up for business freedoms

Margus Linnamäe Source: ERR

Pharmaceuticals magnate Margus Linnamäe has called for the Riigikogu to halt the government's planned pharmacy reform, and stand up for what he calls freedom of enterprise.

Linnamäe, who owns wholesaler Magnum Medical and its associated retail chain Apotheka, made his statements on the same day as the Riigikogu votes on an alternative bill tabled by the Conservative People's Party of Estonia (EKRE) which would liberalize the market, allowing hospitals to run their own retail pharmacies, import medicines and not be tied to Estonian wholesalers, and loosen restrictions of pharmacy management structures.

"In fact, this vote will determine whether Estonia is still a democratic state governed by the rule of law in a liberal market economy. Requiring expropriation of businesses raises questions and concerns. What kind of industry might be targeted at the food or retail stores, hair salons or gas stations?" asked Linnamäe, according to ERR's online news in Estonian, adding that the requirement which the government's reforms hinge on – as required by an act passed around five years ago – for dispensing pharmacists to be majority owners of the outlets they work in, was a throwback to the tradesmens' guilds of the middle ages.

"However, it has long been recognized in most developed countries that such a guild-based market organization does not promote competition, nor provide better service and hence consumer welfare," Linnamäe said.

"'Guilds' also inhibit the overall innovation capacity of the economy by imposing excessive regulation and closure on development," he continued.

Linnamäe also said that the current criticism of the pharmacy sector is based on myths and malicious propaganda.

"When it comes to facts, they are not presented by critics. This has been well understood by consumers, who overwhelmingly agree with the vast majority of surveys today about pharmacy ownership. In the pharmacy ownership restriction debate, much has been said about Finland as a model country for ownership restrictions. Instead, discussions on the liberalization of the pharmacy market have been going on for many years to improve competition and increase consumer satisfaction," he said.

The proposed government reforms, due for April 1, would require dispensing pharmacists to own a minimum of 51 percent of the pharmacies they work in, shifting ownership away from large wholesalers and related chains like Magnum/Apotheka, and Tamro, which operates the Benu chain.

According to Linnamäe, the question is how much the dismantling of a functioning pharmacy system will cost society, something which will certainly result in heavy claims against the state by non-prescription pharmacy owners, as well as the closures of pharmacies, which will reduce the availability of the service.

"Society is expecting, on February 25, the moment when the opposition and the coalition will be able to overcome differences and vote together for public health and business freedom by saying a definite 'no' to the ill-considered and ill-prepared pharmacy reform," Linnamäe said.

Linnamäe also said it was high time the Reform Party, as the largest opposition party in the Riigikogu, to give up political technologies and recognize that the initiative of EKRE to suspend pharmacy reform is in full compliance with the Reform's own economic policy.

"It would be destructive and short-sighted to vote down a liberal draft of pharmacy regulation simply to undermine political rivals. In fact, it is actually undermining public health and the country's competitiveness," he continued.

As reported by ERR News, Linnamäe said earlier this month that he would fall in line with the government reforms, but would also submit a claim for damages to the state

The views of the Riigikogu on pharmacy reform are not clearly purely split on coalition versus opposition lines, as the Center Party has split on this issue.

Part of the explanatory memorandum in EKRE's bill is reportedly verbatim the same as a Reform Party bill from 2018.

EKRE's bill liberalizes pharmacy ownership restrictions and would give pharmacists and health care providers the right to purchase medicines directly from the manufacturer.

By doing so, EKRE, whose bill would also permit hospitals to run their own dispensing retail pharmacies, says it aims to ensure free competition in the market, improving the availability of medicines and increases product choice.

Another issue is whether to make over-the-counter drugs, such as ibuprofen or aspirin, available in kiosks, supermarkets etc., whereas currently these can only be bought from pharmacies.

Critics of the planned government reforms also say that the majority of Estonia's nearly 600 pharmacies do not currently comply with the ownership and other requirements, which could lead to widespread closures come April 1, something which would hit smaller population centers in particular, they say.

Two other rival bills are also to be put before the Riigikogu, both from the opposition Social Democratic Party (SDE).

Of these, one would aim to soften the landing of the proposed government reform, extending the requirement that pharmacies be at least 51 percent owned by the dispensing pharmacists that run them to the end of the year, rather than going into immediate effect on April 1.

However, while they will both be voted on on Wednesday, the day after the EKRE bill, the Riigikogu's Social Affairs Committee  also proposed that they be rejected, in other words the votes will be on whether the consider the bills at all, rather than on the content of the bill as with the EKRE draft.

Dispensing pharmacist groups call for rejection of EKRE bill

In a joint appeal, the Estonian Association of Pharmacists (EAL) and the Estonian Chamber of Pharmacists (EPK), both of which represent dispensing pharmacists, asked members of the Riigikogu to reject the EKRE draft.

"Rejecting the bill at first reading would give pharmacists the confidence to make the investments they need to make the reform a success. It is generally regrettable that just one month before the end of the pharmacy reform, this will be discussed again," said Kaidi Sarv, head of the EAL.

"[The nature of] pharmacy reform has been known to all parties for the past five years. Revoking it or changing it to an unknown at the last minute would already call into question the consistency and credibility of the state's decisions," Sarv added.

According to Karin Alamaa-Aasa, EPK board chair, pharmacists have been waiting for the Riigikogu's explicit confirmation that the reform of the pharmacy will continue since September, when the process began.

"On December 17, the Riigikogu decided to support the continuation of the pharmacy reform, since there is no clear need to change it at the final stage. However, only one month before the final entry into force of the reform, we are again seeing a draft law abolishing pharmacy reform," he added.

A bill which would have reversed course on the reforms in favor of the large chains was voted down by parliament just before Christmas. The government itself had scrapped its own planned reforms some days before this, only for these to be put back on the table.

The Riigikogu started hearing EKRE's bill's first reading at 10.00 a.m. Tuesday. If it passes its first reading, in-line with procedure it would need to go to a second reading, then be sent to the president for her assent, before it passes into law.

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Editor: Andrew Whyte

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